Meanwhile in Japan, an equipment fire at the Renesas semiconductor factory is still under investigation and expected to cause delays of at least three months. The semiconductor shortage and the havoc it has caused signal deeper problems with our fragile supply chains and “just-in-time” logistics. “What you get is stories that are like the storm in Austin, or mishaps with shipping, when really all of these Biblical disasters are united by a longer story of industrial production,” Charmaine Chua, a professor at UC Santa Barbara, said. “It relies on the consistent depression of wages and the consistent search for cheaper markets.” A globalised and deeply interdependent semiconductor supply chain means that neither the US nor China has control of the advanced semiconductor industry needed to meet demand, particularly as trade sanctions have made it harder for the supply chains to run smoothly. Amid the shortage, politicians have started a race for chip dominance and independence. “This is about out-competing China,” US Commerce Commerce Secretary Gina Raimondo said bluntly earlier this month following the announcement that the latest White House infrastructure plan would include $50 billion for the American semiconductor industry. In February, the European Union released a plan to double its semiconductor output. China, for its part, has just issued a major tax break to chipmakers in an effort to ramp up production. The production issues have put more pressure on Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor producer, and the company which remains at the centre of the geopolitical turmoil. The Taiwanese company manufactures chips used in iPhones, F-35 striker jets, and Amazon’s cloud computing systems. as well as having a massive market share, accounting for 54 percent of total chip manufacturing revenue worldwide. The company has its own problems as well. Taiwan is facing its worst drought in more than a half century; truckloads of water have been shipped into TSMC’s factories in the hope of preventing further chip delays. At just three nanometres thick, TSMC produces the most advanced semiconductors in the world. Both the US and Chinese tech industries rely heavily on TSMC’s cutting edge chip fabrication. TSMC pioneered a “foundry and fabless” production model in the late 1980s, which separated the design of semiconductors from their manufacturing. This allowed tech companies to design chips without having to actually manufacture them. “Over time the business model has become popular because of the idea that you can just focus on designing your semiconductors, while leaving companies like TSMC to actually make them,” said Ming-chin Monique Chu, a professor at the University of Southampton whose work focuses on Taiwan and the global semiconductor industry. TSMC’s dominance in the sector has put them in a difficult spot. China regards Taiwan as part of its territory, and has threatened to invade the country. Former president Donald Trump’s decision to blacklist Chinese tech company Huawei also prevented TSMC from working with the company , which was a major client. The former White House administration also pressured TSMC to bring manufacturing capacity over to the US, with TSMC recently announcing plans to open a large fab in Arizona. The foundry and fabless model have also contributed to an incredibly complex supply chain—a single chip may have design sent from the US, manufacturing provided in Taiwan, silicon wafer parts imported from Germany, equipment from South Korea or the Netherlands, and chemicals sourced from Japan, before finally being packaging in China. According to Chua, who works on globalisation and trans-Pacific trade at UC Santa Barbara, these intricate supply chains depend on what’s called “pull production,” where companies predict the amount of demand and then aim to carry the least amount of stock in order to optimise efficiency and profits. In short,, the semiconductor shortage may be less an act of God and more the result of supply chain profiteering. “The choke point is not just, say the Suez Canal, but is actually the reliance on supply chains and [the idea of] continued availability,” says Chua. The automotive industry—long seen as an iconic American industry associated with industrial decline—has been hit particularly bad check my source by the chip delays. Ford has cut shifts at the Louisville plant that manufactures its F-150 truck.https://www.vice.com/en/article/z3vjd8/everything-you-need-to-know-about-the-great-semiconductor-shortage
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