Global core shortage
Just like water and air, there are certain things that can only truly appreciate its importance when they are in short supply, such as chips.
Throughout February, there was a global core shortage. Global auto giants such as GM, Ford, Volkswagen, Toyota and so on across several continents have been forced to cut production due to chip shortages. The production processes of digital giants such as Apple and Samsung have also been blocked due to chip shortages. Sony, which has just launched the PlayStation 5, said that with the global chip shortage, it can’t guarantee that this popular game console will have enough stock this Christmas.
How big is the gap? According to a report released by the research institute IHS Markit on February 16th, in the automotive sector alone, due to the shortage of chips, it is expected that the global production will be reduced by nearly 1 million cars in the first quarter. According to a report released by MarketWatch, the global chip shortage is expected to continue for three or four quarters, and it may not return to normal until 2022.
Today, when all walks of life are generally entering the Internet of Everything, chips are far more than just cars, consumer electronics, industrial control, medical and other equipment. Therefore, the lack of core is undoubtedly a “disaster” for the global manufacturing industry.
In fact, since last year, many consumer electronics industries have raised warnings about chip shortages, but they have no choice but to solve them in a short time. There are many main reasons for today’s chip shortage: Sino-US trade friction has caused the United States to blacklist a number of Chinese chip manufacturers such as SMIC, which has had a huge impact on the global chip supply chain. The new crown epidemic has exacerbated the shortage of chips. On the one hand, people work and study at home, driving up consumer demand for electronic products; on the other hand, factory shutdowns have restricted chip production capacity. Immediately afterwards, a series of natural disasters that occurred in the world’s major chip production areas at the beginning of this year exacerbated the shortage.
By the end of 2020, 17 EU countries, led by France, Germany, and Italy, plan to spend hundreds of billions of euros to develop semiconductors. On February 24, U.S. President Biden stated that in view of the shortage of semiconductors forcing domestic auto and other product manufacturers to reduce production, he will seek legislative funding of 37 billion US dollars to strengthen local chip manufacturing. Since the Sino-US trade friction, China has increased its efforts to promote the localization of chips.
At present, it seems that to solve the shortage of chips, the only way to increase investment is to wait.
Three disasters behind the chip shortage
In this round of global chip shortages, there are three other natural disasters that occurred in major chip manufacturing locations.
On February 13, a magnitude 7.3 earthquake struck the northeastern coast of Japan. Japanese chip maker Renesas Electronics suspended operations at its Ibaraki prefecture plant for security purposes. Although production will resume in a few days, it will take a long time to restart the chip factory once it stops work.
On February 15, the southern United States was hit by a strong blizzard caused by the polar vortex. On February 17, “Barron’s Weekly” reported that due to a blizzard in Austin, Texas, which caused many local power outages, many factories were required to suspend work to ensure the power supply needed by residents. The local factories of chip giants such as NXP Semiconductors, Samsung Electronics and Infineon have shut down.
In 2020, affected by El Niño and not being hit by a typhoon for the first time in more than 50 years, Taiwan, China has had less precipitation throughout the year, and there has been a severe water shortage since October. Under the premise that precipitation may still be limited in the next few months, since February 25th, TSMC and other important chip manufacturing companies in the world have begun water restriction measures. Insufficient water supply may exacerbate the shortage of chips.