By jwr |

Where was Hari Seldon? He would have predicted all this and the effects would have been much softer.

Semiconductor shortage

A global shortage of semiconductors is growing out of control. Almost all types of electronic goods are affected, from smartphones and gaming equipment to vehicles and kitchen appliances. While the semiconductor manufacturers struggle to supply their largest customers like Apple and Samsung, smaller customers like automobile and appliance manufacturers are experiencing delays that are now halting the production lines: just a small chip missing and the vehicle can't get finished (The Guardian).

How could this happen?

The basis lies again, of course, in the corona crisis with initial production delays, now alleviated. And then a couple of additional developments.

  • People bought more stay-at-home electronic goods in the pandemic, increasing demand: TVs, home computers, game consoles, 5G enabled phones, and whatever you yourself bought to stave off boredom.
  • Vehicle manufacturers have now finally and en masse decided on electric cars, mostly electronics-stuffed. All this requires semiconductors.
  • Not described elsewhere, but a known fact, is when demand of certain items increases China, it is likely to affect the entire globe. We note here baby milk powder, hardwood, (protected) exotic animals, and wild mushrooms as simple examples.
  • Then D. Trump (US National Vulgarist) added the high-tech front to the US-China Trade War: semiconductors. And there you have it, a perfect storm.

Who makes the chips?

While a number of major tech companies claim to be chip manufacturers, many of those companies simply aren't. They farm the manufacturing out to technologically adept lower income countries: China, Taiwan, South Korea. Note here the new-fangled idiosyncrasy of terms: a manufacturer who does not manufacture remains to be called a manufacturer, albeit a "fabless manufacturer", while the jargon for an actual manufacturer is not called a manufacturer, but a "foundry". The top 5 foundries, listed roughly according to size:

  • TSMC (Taiwan), leader, cutting edge chips, standard chips
  • Samsung Foundries (South Korea), Intel (USA), SMIC (China), for standard chips
  • Global Foundries (USA), Skywater (USA), both for specialty chips

Note: Of course there are many smaller foundries all over, but generally a large unreal manufacturer would avoid to get the components for a specific item from a slew of different smaller companies. Note also that world leader TSMC also operates semiconductor foundries in China, producing standard chips. And also note that China is on turbodrive to expand local semiconductor manufacturing for standard and high-tech chips.

A complete list of List of Semiconductor fabrication plants is shown in Wikipedia. Toggle the list for Production Capacity (size). Also toggle it for Process Technology (sophistication) to see who manufactures the newest/ fastest/ smallest high-end chips (indicated by 3nm or 5nm), that is by the way TSMC in Taiwan, possibly by order and design of Apple.

Geopolitical aspects

We've already seen the dependence of all modern products and manufacturing on these semiconductors. The concentration of the bulk of manufacturing in an area where one single country, China, is showing increasing influence, to the degree of threats and even military grandstanding, should be seen as a global geopolitical socio-economic risk.

Whatever the few pennies it costs more, these semiconductors should also be made on grand scale in other areas.

Strategic materials

In cases of crises or conflicts, the obvious aim is to secure needed strategic materials. These used to be oil, steel, coal, food, but also important manufacturing. While the fundamentals of strategic materials remain, the content changes, and now includes rare metals, water and... semiconductor manufacturing.

Just one example. "Beijing’s main problem is the manufacturing of high-end chips. Huawei’s Kirin chipsets are made by the Taiwan Semiconductor Manufacturing Corporation (TSMC) using American technology." (TRT World). Now that's quite a conflagration of dependencies, and it's already causing trouble.

Low Tech

Apparently at mid 2021, the greatest bottleneck are the small IC chips that control larger or smaller LCD screens. Specifically these chips are not made in high tech IC foundries making high-end 10 or 7 nanometer chips, but in rather older, run of the mill factories making 40 to 150 nanometer chips. As everyone has been rushing to upgrade (ostensibly to make more money), the "manufacturers" were caught flatfooted when demand for cheap ICs controlling mundane LCD screens suddenly mushroomed during the pandemic. And now, experts expect the backlog to last well into 2023!

What's next?

Of course, the semiconductor sector will normalize at some time, hopefully with more geographical diversification. But as before, chips are not likely to get less expensive.

As of mid 2021 the pandemic continues to cause a slew of shortages, either caused by production issues, export stops, changed consumer behavior, or, like in China, industrial catch-up growth - again affecting the globe.

Of course, first it was a shortage of personal protection equipment (PPE), then a shortage in long-distance freight, then a shortage of containers, then a shortage of semiconductors. As India undergoes a catastrophic third wave, it halts all exports of the vaccines expected in many, mostly developing countries. But as economies begin to recuperate the scope of shortages expands from aluminum foil to construction wood.

This leads to price increases. Some of those increases will not be temporary, so according to some specialists, "inflation" is on the loom...

Then add to the that mix: Russia's vicious war against the Ukraine, with a worldwide gas, oil and grains crisis. This is definitely not funny anymore.

---

https://www.theguardian.com/commentisfree/2023/jun/10/china-and-physics…

https://www.theguardian.com/world/2023/may/22/chinas-war-chest-how-the-…

https://www.theguardian.com/commentisfree/2022/jul/14/us-microchip-indu…

https://eand.co/why-everything-is-suddenly-getting-more-expensive-and-w… And now, shortages in just about everything - but read this with caution, some doubtful "facts".

https://www.marketwatch.com/story/the-tiny-1-chip-that-is-behind-record…

https://www.bloomberg.com/opinion/articles/2021-06-02/china-s-inflation…

https://www.bloomberg.com/news/articles/2021-05-17/inflation-rate-2021-…

https://www.trtworld.com/magazine/chip-wars-us-china-and-the-battle-for…

https://www.cnbc.com/2021/02/10/whats-causing-the-chip-shortage-affecti…

https://hbr.org/2021/02/why-were-in-the-midst-of-a-global-semiconductor…

https://deepforest.substack.com/p/a-tour-of-the-semiconductor-industry

https://deepforest.substack.com/p/an-introduction-to-semiconductor

https://en.wikipedia.org/wiki/Semiconductor_Manufacturing_International…

https://en.wikipedia.org/wiki/TSMC

History of TSMC:

https://docs.google.com/document/d/1RMr9lzlgrReruoosnoHLIZ0hHbqJT5Kq7hZ…

 

 

semiconductor crisis
electronic chips crisis
us-china trade war
geopolitical risks
dysfunctional capitalism

Comments

canada pharmac… (not verified)

2 months 1 week ago

Permalink

Hi, I do think this is a great website. I stumbledupon it ;) I'm going to revisit once again since i have book-marked it. Money and freedom is the best way to change, may you be rich and continue to guide other people.

canadian pharm… (not verified)

2 months 1 week ago

Permalink

Greetings! Very useful advice within this article! It's the little changes that make the biggest changes. Thanks for sharing!

canadian pharm… (not verified)

2 months 1 week ago

Permalink

I don't know whether it's just me or if perhaps everybody else experiencing issues with your website. It appears as if some of the written text within your posts are running off the screen. Can somebody else please comment and let me know if this is happening to them too? This might be a issue with my web browser because I've had this happen previously. Thank you

medical pharmacies (not verified)

2 months 1 week ago

Permalink

What you published was very reasonable. But, what about this? suppose you composed a catchier post title? I mean, I don't want to tell you how to run your website, but suppose you added a headline to maybe get people's attention? I mean %BLOG_TITLE% is kinda vanilla. You should peek at Yahoo's front page and watch how they create article titles to grab people interested. You might add a video or a related picture or two to get people interested about everything've got to say. Just my opinion, it would make your posts a little bit more interesting.

list of canadi… (not verified)

2 months 1 week ago

Permalink

First of all I would like to say fantastic blog! I had a quick question which I'd like to ask if you do not mind. I was interested to know how you center yourself and clear your head prior to writing. I've had a tough time clearing my thoughts in getting my thoughts out. I do enjoy writing however it just seems like the first 10 to 15 minutes are usually wasted just trying to figure out how to begin. Any recommendations or tips? Appreciate it!

canadian pharm… (not verified)

2 months 1 week ago

Permalink

This is a topic that's near to my heart... Take care! Exactly where are your contact details though?

canadian pharm… (not verified)

2 months 1 week ago

Permalink

Heya just wanted to give you a brief heads up and let you know a few of the pictures aren't loading properly. I'm not sure why but I think its a linking issue. I've tried it in two different internet browsers and both show the same outcome.

canada pharmac… (not verified)

2 months ago

Permalink

Fantastic site. A lot of helpful info here. I am sending it to some friends ans additionally sharing in delicious. And naturally, thank you to your sweat!

canadian pharm… (not verified)

2 months ago

Permalink

I've read several excellent stuff here. Certainly price bookmarking for revisiting. I wonder how much attempt you put to create this type of fantastic informative site.

canadian pharm… (not verified)

2 months ago

Permalink

I am truly delighted to glance at this weblog posts which carries plenty of helpful data, thanks for providing these information.

pharmaceutical… (not verified)

2 months ago

Permalink

excellent issues altogether, you just received a new reader. What would you recommend about your put up that you just made a few days ago? Any sure?

canada pharmac… (not verified)

2 months ago

Permalink

Its like you learn my thoughts! You appear to understand a lot approximately this, like you wrote the e book in it or something. I feel that you can do with some % to pressure the message home a bit, but instead of that, this is fantastic blog. A fantastic read. I will certainly be back.

canadian pharm… (not verified)

2 months ago

Permalink

I like the helpful info you provide in your articles. I will bookmark your blog and check again here frequently. I am quite certain I will learn plenty of new stuff right here! Best of luck for the next!

Add new comment

About text formats
  • Allowed HTML tags: <a href hreflang title rel> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id> <sup> <sub>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.