{"id":195455,"date":"2021-03-05T21:04:28","date_gmt":"2021-03-05T18:04:28","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-the-world-ran-out-of-semiconductors\/"},"modified":"2021-03-05T21:04:28","modified_gmt":"2021-03-05T18:04:28","slug":"how-the-world-ran-out-of-semiconductors","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-the-world-ran-out-of-semiconductors\/","title":{"rendered":"#How the world ran out of semiconductors"},"content":{"rendered":"

“#How the world ran out of semiconductors<\/strong>”<\/p>\n

\n There’s a global shortage in semiconductors, and it’s becoming increasingly serious. The US is currently reviewing of its supply of the technology<\/a>, following a landmark executive order<\/a> from President Joe Biden.<\/p>\n

The president also pledged US$37 billion (\u00a326 billion) to cover the short-term costs of rebuilding and securing America’s supply of semiconductors<\/a>, which are a fundamental part of microchips and thus integral to everything from computers to smartphones to renewable energy and military hardware. <\/p>\n

The automotive sector has been worst affected by the drought, in an era where microchips now form the backbone of most cars. Ford is predicting a 20% slump<\/a> in production and Tesla shut down<\/a> its model 3 assembly line for two weeks. In the UK, Honda was forced to temporarily shut<\/a> its plant as well. <\/p>\n

Even highly experienced tech companies such as Nvidia and Microsoft are struggling to provide a steady stock of graphics cards<\/a> and Xboxes<\/a> respectively. It app<\/a>ears that no company, big or small, tech or non-tech, is safe from the wide-ranging impact of the great semiconductor famine of 2021.<\/p>\n

The concentration problem<\/b><\/p>\n

While it is easy to blame the COVID-19 pandemic for this situation, the truth is that the global semiconductor supply chain had this coming for some time. As much as 70% of<\/a> the world’s semiconductors are manufactured by just two companies, Taiwan Semiconductor (TSMC) and Samsung.
\n <\/p>\n

The entry barriers into semiconductor manufacturing are astronomically high. There’s a steep learning curve required to set up a semiconductor foundry, entailing an upfront investment of<\/a> US$10-$12 billion and then at least three years<\/a> to become production-ready. <\/p>\n

Even then, there are no guarantees that a new foundry’s chip yields will match those of the incumbents. Chips rapidly become obsolete and price pressures are a major problem in the tech sector, so there are lots of risks to profitability. <\/p>\n

Due to such harsh economics, it has only made sense for a handful of large players to invest in manufacturing capabilities and then spread those costs and risks across hundreds of thousands of customers. Global tech has historically been very happy to hand the manufacturing reins to TSMC and Samsung. And in turn, this has created the supply-chain equivalent of a house of cards. <\/p>\n


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