by Alan Friedman |
The global crisis in the semiconductor supply chain has worsened: the shortage problem has grown in a short period of time and now threatens to extend. There is also another reason: trends in the global chip market need to be understood and followed, as they could have a deleterious impact on global recovery and growth; a major 'risk factor' for the macroeconomic situation. In other words, the current semiconductor shortage is not only a 'case study of Covid's impact on supply chains and manufacturing trends', but also one of the most important factors that could weaken the recovery in the US, Europe and worldwide.
Biden's actions against the shortage
President Joe Biden was clear and decisive. He quickly assumed a leadership role and tasked some of his top White House advisers to set up a working group to review industry policies related to the sector. The issue is considered so urgent and strategic that National Security Advisor Jake Sullivan has been brought in to coordinate operations.
In February, Biden called for a 100-day review of the semiconductor supply chain from the perspective of US homeland security, and also held a virtual meeting with the CEOs of 19 major companies. In the meantime, Congress is working to legislate Biden's proposal to include $50 billion for the semiconductor industry in government infrastructure spending plans. But the situation remains difficult. Creating a new semiconductor factory from scratch takes billions of dollars and several years of work. Unfortunately, there are no easy solutions, and especially no quick fixes. Therefore, there is a growing belief among industry leaders that the crisis may ease slightly in the second half of 2021, but continue to cause various problems until mid-2022.
The concerns of the automotive sector
Car manufacturers have suffered the most from the crisis, both in Europe and in the US, but Apple and other large electronics companies are also beginning to feel the effects. At the end of April, Jim Farley, CEO of Fordpredicted that the semiconductor shortage would not be fully resolved until 2022. Farley told investors that for Ford, the damage is estimated at about $2.5 billion and a drop of 1.1 million units produced by 2021. "Things, before they get better, will get worse," the Ford chief said.
Chipmakers' forecasts
The same prediction was also made by Pat Gelsinger, CEO of IntelThe US chipmaker Pat Gelsinger told the Washington Post that the global shortage will only diminish in intensity in a couple of years, as demand grows in the face of limited production capacity. "It will take a couple of years to increase capacity," he explained. Gelsinger, who was among the senior executives who participated in the virtual meeting with President Biden, also said during the meeting that medical equipment suppliers had made clear their concerns about the semiconductor shortage and the impact on the industry.
Taiwanese reaction
Meanwhile, on the other side of the world, in Taiwan, the largest silicon producers are moving quickly to meet market demand and increase their production capacity.
The giant Tsmc, which has decided to invest USD 100 billion, expects delays in the supply chain to continue into 2022, impacting companies such as Apple and Qualcomm, among others. Jason Wang, president of Umc, another major Taiwanese manufacturer, has just announced a $3.6 billion investment plan: "To address the semiconductor shortage, we are working together with our customers, suppliers and partners to mitigate the supply chain difficulties.
Waiting for the rebound
These are all promising developments, although none of them guarantees a short-term solution.
However, every cloud has a silver lining: there may be a downturn in sales of smartphones, iPads, and cars as well as a variety of other products this year, but when production capacity is finally expanded, the pent-up demand should produce an even stronger rebound by 2022.
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