Microchips: A worldwide crunch starts to bite
There’s a global chip shortage that’s “limiting production of everything from video games to airplanes,” said Shira Ovide in The New York Times. Automakers have been complaining for weeks about having to “slow or temporarily stop manufacturing because they couldn’t get the required computer chips” for entertainment consoles or power steering. Though those plant shutdowns have gotten the most attention, problems stretch far beyond the auto industry. Last spring, chipmakers struggled to keep pace with the “drastic demand surges” in consumer electronics, which is why it was “difficult or more expensive than you expected to buy a computer for your child’s school.” The logjam moved on to cars this winter, and now it’s starting to “whipsaw back into electronics.”
“Designing chips is easier than ever,” said The Economist, but “making them has never been harder.” A growing number of tech firms, including Apple, Amazon, and Google, as well as a “gaggle of startups,” have begun designing their own custom silicon to “eke out performance gains” and challenge the established players like AMD, Nvidia, and Intel. But only three firms in the world are able to make advanced processors: Intel, Samsung, and Taiwan Semiconductor Manufacturing Co. (and Intel said recently it would begin to outsource some of its designs). The costs of their precious high-tech “fabs,” as chip factories are known, are soaring: TSMC’s newest factory, for producing next-generation chips, cost $19.5 billion.
The bottleneck for automakers isn’t going away, said Dan Gallagher in The Wall Street Journal. “The harsh reality is that chips for cars have to compete for manufacturing space with other products that generate a much higher return.” About 70 percent of the car units are made by TSMC, which was already operating at capacity making components for phones and gaming devices. Adding to the difficulties, many car chips are “still made on 200 mm wafers, which were phased out of the most advanced chip-making processes more than a decade ago.”
The White House has pledged to address the ongoing delays, said Jenny Leonard in Bloomberg.com. President Biden signaled last week he planned to sign an executive order to direct “a government-wide supply-chain review” to better “identify choke points.” We desperately need to improve our domestic semiconductor manufacturing capability, said Brad Slingerlend and Jon Bathgate in MarketWatch.com. This should serve as a wake-up call. It matters not only “as the digitization of the global economy accelerates” but also for national security. The idea that we’re “relying on Taiwan for the production of critical chip components for equipment such as the F-35 fighter is scary and untenable.”