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

canadian pharm… (not verified)

1 month 4 weeks ago

Permalink

What's Happening i'm new to this, I stumbled upon this I've found It positively useful and it has aided me out loads. I'm hoping to contribute & aid different customers like its aided me. Good job.

online pharmacies (not verified)

1 month 3 weeks ago

Permalink

After exploring a number of the articles on your web site, I seriously appreciate your way of writing a blog. I bookmarked it to my bookmark webpage list and will be checking back in the near future. Please check out my web site too and tell me your opinion.

medical pharmacy (not verified)

1 month 3 weeks ago

Permalink

My brother suggested I might like this blog. He was totally right. This post actually made my day. You can not imagine just how much time I had spent for this info! Thanks!

pharmacy cheap… (not verified)

1 month 3 weeks ago

Permalink

Usually I do not read article on blogs, but I wish to say that this write-up very forced me to take a look at and do it! Your writing style has been amazed me. Thank you, quite nice post.

canadian pharmacy (not verified)

1 month 3 weeks ago

Permalink

Link exchange is nothing else except it is only placing the other person's website link on your page at proper place and other person will also do same in support of you.

canada pharmac… (not verified)

1 month 3 weeks ago

Permalink

Does your blog have a contact page? I'm having a tough time locating it but, I'd like to send you an e-mail. I've got some ideas for your blog you might be interested in hearing. Either way, great site and I look forward to seeing it improve over time.

international … (not verified)

1 month 3 weeks ago

Permalink

I am sure this piece of writing has touched all the internet users, its really really good article on building up new website.

pharmacy onlin… (not verified)

1 month 3 weeks ago

Permalink

Have you ever thought about creating an ebook or guest authoring on other websites? I have a blog based on the same ideas you discuss and would love to have you share some stories/information. I know my readers would enjoy your work. If you are even remotely interested, feel free to shoot me an email.

canadian pharm… (not verified)

1 month 3 weeks ago

Permalink

Oh my goodness! Amazing article dude! Thank you so much, However I am having issues with your RSS. I don't understand the reason why I cannot subscribe to it. Is there anybody else getting the same RSS issues? Anyone that knows the solution will you kindly respond? Thanx!!

canadian pharm… (not verified)

1 month 3 weeks ago

Permalink

I know this if off topic but I'm looking into starting my own weblog and was curious what all is needed to get set up? I'm assuming having a blog like yours would cost a pretty penny? I'm not very internet savvy so I'm not 100% certain. Any recommendations or advice would be greatly appreciated. Appreciate it

canadian drugs… (not verified)

1 month 3 weeks ago

Permalink

Hello very nice blog!! Man .. Excellent .. Amazing .. I will bookmark your blog and take the feeds additionally? I am glad to find so many helpful information here in the submit, we'd like develop extra techniques on this regard, thanks for sharing. . . . . .

cialis generic… (not verified)

1 month 3 weeks ago

Permalink

Your style is really unique compared to other people I have read stuff from. I appreciate you for posting when you have the opportunity, Guess I will just bookmark this page.

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.