True. But older cars have a mechanical distributor ignition system with points. They will take an EMP licking and keep on ticking …
Posted on 09/06/2021 12:38:01 PM PDT by blam
The great computer chip shortage of 2021 will likely get worse before it gets better. This conclusion was reached following brief study and anecdotal review.
Moreover, while COVID lockdowns may have initially triggered the shortage, several decades of shortsighted decisions and simmering geopolitical tensions make it much more than a matter of fixing a few broken links in the supply chain. Here’s why…
The world’s top two leading chip companies are Taiwan’s TSMC and South Korea’s Samsung Electronics. These two Asian firms, combined, control more than 70 percent of the semiconductor manufacturing market.
The U.S., which was once a leader, lags behind in chip manufacturing after major – and shortsighted – shifts in the business models in the semiconductor industry over the last 15 years. But this could change…assuming the U.S. government can bend the semiconductor market to better meet its will.
The global semiconductor shortage and geopolitical tensions with China have now prompted Washington scrutiny of the supply chain. Suddenly, the U.S. government doesn’t like how semiconductor manufacturing is concentrated in the hands of a small number of Asian companies. There is now a push to bring manufacturing back to American soil.
The U.S. government has earmarked billions of dollars and is reportedly looking at strategic alliances with other nations. The U.S. government, however, has a terrible track record for economic intervention. Typically, its approach involves throwing gobs of fake money at a problem and hoping it goes away. Such an approach is destine for failure.
The key to understanding the geopolitics of semiconductors, which countries dominate and why the U.S. is trying to boost its domestic industry, is understanding the supply chain and business models. Companies like Intel are integrated device manufacturers (IDMs). This means they design and manufacture their own chips.
Most other U.S. based semiconductor companies are considered fabless – they design chips but outsource manufacturing to foundries. Namely, they outsource chip manufacturing to TSMC in Taiwan and Samsung Electronics in South Korea.
Supply Chain Complexity
Over the last 15 years, U.S. and European companies shifted to this fabless model. TSMC and Samsung took advantage and invested heavily in leading-edge manufacturing technology. Thus, if a company like Apple wants to get the latest chip for their iPhone produced, they have to turn to TSMC to do it.
TSMC has 55 percent foundry market share and Samsung has 18 percent, according to data from Trendforce. Taiwan and South Korea collectively have 81 percent of the global market in foundries. They essentially dominate the market. Nearly the whole of technological production is reliant on these two countries, and primarily on two companies… TSMC and Samsung.
Bank of America recently summed up the remarkable shift that has occurred:
“In 2001, 30 companies manufactured at the leading edge however as semi manufacturing grew in cost and difficulty, this number has fallen to just 3 firms.”
These three firms are TSMC, Samsung, and Intel. However, Intel’s manufacturing process has also fallen behind that of TSMC and Samsung. Neil Campling, head of technology at Mirabaud Securities, clarifies how this happened:
“Taiwan and South Korea have become leaders in wafer fabrication which requires massive capital investment; and part of their success over the last 20 years is due to supportive government policies and access to skilled labour forces.”
Yet the supply chain is even more complex.
While TSMC and Samsung are the dominant manufacturers of semiconductors, they still rely heavily on equipment and machinery from the U.S., Europe and Japan. The companies that make the tools required by foundries are known as semiconductor capital equipment vendors or “semicap” for short.
The top five semicap equipment vendors make up nearly 70 percent of the market. Three of the five are U.S. companies, one is European and one is Japanese.
However, Netherlands-based ASML is the only company in the world that can make extreme ultraviolet (EUV), which is required to make the most advanced chips, including those manufactured by TSMC and Samsung.
The Great Computer Chip Shortage of 2021 is Just Heating Up
Part of U.S. policy involves forming alliances. In April, the Nikkei reported that the U.S. and Japan will cooperate on supply chains for critical components like semiconductors. The two sides will work towards a system where production is not concentrated in specific regions like Taiwan.
The U.S. is also working to limit China’s influence on semiconductor development. China has invested in its semiconductor industry over the last several years. For example, SMIC is China’s largest foundry, and a competitor to TSMC and Samsung. But even with these large investments, SMIC’s technology is several years behind that of its Taiwan and South Korean rivals.
U.S. sanctions and actions are looking to further hold China back. Last year, Washington put SMIC on a blacklist known as the Entity List. That restricts American companies from exporting certain technology to SMIC. Roughly 80 percent or more of SMIC equipment comes from U.S. vendors.
The U.S. government also recently pressured the Netherlands government to stop the sale of an ASML machine to SMIC. The machine is needed to make the most cutting-edge chips. That machine has still not been shipped to China. Without equipment from the U.S. or its allies, it’s impossible for China to manufacture leading edge chips.
China, however, may have another option. If the country can’t attain the technology needed to make the most advanced chips through economic means, the promise of force has recently become much more attractive.
This week Taiwan’s Ministry of National Defense delivered its annual report to lawmakers. The report warned that China could “paralyze” Taiwan’s air and sea defenses and counter attack systems with “soft and hard electronic attacks.” And as ZeroHedge noted:
“With the probabilities [of an invasion] increasing, China could attempt to seize Taiwan by force amid America’s disorganized exit from Afghanistan, which has tarnished U.S. prestige.”
If such an invasion were successful, Communist China would have de facto control of TSMC.
In the interim, as the Wall Street Journal reports, the production of computer chips may be delayed because there are not enough ceramic bits. Modern electronics, like smartphones, include thousands of tiny bits of ceramic to control the flow of electricity. Electronic vehicles include over 10,000 ceramic bits.
They are called multilayer ceramic capacitors (MLCCs) and, like semiconductors, their fabrication is concentrated in just a few Asian companies…and COVID related factory shutdowns could delay their production.
Murata Manufacturing, which accounts for 40 percent of the global market, closed a major MLCC factory in Fukui Japan for the final week of August because of a COVID outbreak. Taiyo Yuden, another major bit maker, suspended some of its operations at its Malaysia factory because of employee infections.
We suppose the ceramic bit shortage will work itself out in good time. But, nonetheless, the great computer chip shortage of 2021 is just heating up. This is a story worth keeping an eye on. Not only for its economic and geopolitical implications. But for possible investment opportunities too.
“ What’s stopping the USA from making them now?”
Democrats.
Labor laws, taxes, environmental laws, building permits, regulations, etc.
>> It’s not woke, it’s stock prices.
I get that aspect and realized I was taking liberties with the canonical meaning of “Woke”, but the shortsightedness and disregard of the Country’s long-term health makes them equally reckless.
The Country needs a ruthless, capitalistic revolution — not talking about violence, but instead an emergence of a renewed focus on survival, prosperity, and the eradication of corrupt socioeconomic philosophies and practices.
Y former Intel ping a rooski
How imperialist of him. We’re worried _____________ will hurt our environment but we’ll pay you to hurt yours.
True. But older cars have a mechanical distributor ignition system with points. They will take an EMP licking and keep on ticking …
Odd that this story comes up immediately after I went to my usual suppliers and found the cupboard bare with only a vague promise of delivery in April of 2022 :-/
I need these processors to build working prototypes for a couple of important projects.
If the CCP takes Taiwan then we are truly up the creek...
I gathered together a supply of various processors but during design decided I needed a lot more capability...
On these processors is the legend—> TSMC
TSMC is Taiwan Semiconductor Manufacturing Company...
TSMC is the big Kahuna when it comes to powerful processors and SOCs. If that foundry is lost our way of life will change :-/
https://www.tsmc.com/english/aboutTSMC/company_profile
We weren’t taking advantage of it, and we weren’t going to. Same with oil in Iraq.
Not only has the Woke/Green/CCP/Democrat Party crippled our independence, they have no demoralized our military and given a large chunk of our ground force's equipment and supplies.
We build nothing, we cannot feed ourselves, we cannot/will not defend our borders, our cities, our history, our culture or our population any more.
We can however play candy crush and as an earlier post noted - We can name all the Kardashians.
All part of the plan. The great, glorious plan.
What you cannot defeat from without you must defeat from within.
The Democrats built the Trojan Horse and filled it with Social Security, Welfare and Entitlements.
Stayed tuned for Part 2 - The Second American Civil War and the End of America as a global or even regional player.
TSMC just bought a 1700 acre plot north of Phoenix and announced that it plans to invest AT LEAST $30 billion to build a new campus and factory there. It looks like the CCP’s threats to Taiwan may have motivated TSMC’s move to offshore their production to the U.S.
It would probably take years of environmental impact studies just to build the factory.
We used to be able to do stuff like this quickly but not anymore. Too much bureaucratic red tape. China doesn't have this problem.
Related, from a couple of weeks ago...
Back in 1950s, you’d be lucky to get 50k out of a car. Today 200k is not uncommon. How’s that flat screen tv workin for ya? Want that black and white 200 lb CRT back?
Not to mention medical equipment, military weapons, aircraft, telecommunications, etc, etc, etc. Luddites have a rose-colored view of many things in the past.
Excellent article. As is usual Government caused this problem and certainly will not be the solution.
There is a very large chip fab facility being built in Arizona by the Taiwanese. Hope they get up and running soon.
The author is correct about “Fabless” companies that just do engineering and out source Fab.
Much of that has to do with EPA regulations and Democrat NIMBY tendencies. They tie you up in court for years if you try to build a “foundry”.
We also need a government interested in making sure that we develop a non-political, engineering oriented and MANAGED Chip industry more robust than any other on the face of the Earth.
The extra mileage on cars has more to do with engine design, metallurgy and synthetic oil.
1970, a full size Chevy pickup truck with a 350 small block got 7mpg. My 2001 F150 4x4 with 280,000 miles on it gets 15-16mpg. It fires right up every morning, even when it's single digit temps outside, with no pumping the gas pedal or even giving it one press to set the choke.
It has no cell phone connection. I can stick my scan tool on it and diagnose the problem in a couple of minutes in many if not most cases. It will even tell me which cylinder is misfiring if any.
Intel needs more fabrication capacity because they are getting their asses kicked. But yes, ultimately it does mean more control.
If we truly want to make America great again and make America first we need to establish a list of industries and products that are national security priorities.
The used pc market is about to explode.
I have a few that no longer work but I’m hanging on to them because I believe I would have to remove the hard drive so no personal information is on there. I am not computer savvy when it comes to this.
I’ll go for that!!
I wonder if it’s best to obtain a new hard drive and fan on one computer that heats up. I loved it and it was perfect for the things I do.
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