There’s nothing like a supply shock to illuminate the tectonic shifts in an industry, laying bare the accumulations of market power that have accrued over years of incremental change. That’s what’s happened in the $400 billion semiconductor industry, where a shortage of certain kinds of chips is shining a light on the dominance of South Korean and Taiwanese companies.
Demand for microprocessors was already running hot before the pandemic hit, fueled by the advent of a host of new applications, including 5G, self-driving vehicles, artificial intelligence, and the internet of things. Then came the lockdowns and a global scramble for computer displays, laptops, and other work-from-home gear.
Now a resulting chip shortage is forcing carmakers such as Daimler, General Motors, and Ford Motor to dial back production and threatens to wipe out $61 billion in auto industry revenue in 2021, according to estimates by Alix Partners. In Germany, the chip crunch is becoming a drag on the economic recovery; growth in China and Mexico might get dinged, too. The situation is spurring the U.S. and China to accelerate plans to boost their domestic manufacturing capacity.
The technological prowess and massive investment required to produce the newest 5-nanometer chips (that’s 15,000 times slimmer than a human hair) has cemented the cleavage of the industry into two main groups: those that own their fabrication plants and those that hire contract manufacturers to make the processors they design. South Korean and Taiwanese companies figure prominently in the first camp. “South Korea and Taiwan are now primary providers of chips like OPEC countries once were of oil,” says Ahn Ki-hyun, a senior official at the Korea Semiconductor Industry Association. “They don’t collaborate like OPEC. But they do have such powers.”
Continue reading your story on the app
Continue reading your story in the magazine
The Food Fight in Fake Meat
Beyond Meat was an early leader. But rival Impossible Foods and others want to eat its lunch
The U.K. Wants to Clean Up Space
The amount of debris in orbit is an increasing danger—and a potential market opportunity
Prices for a warehouse staple are at a record, buoyed by the boom in e-commerce
THE MAN WHO KEEPS THE FAR RIGHT ONLINE
While Amazon and its peers have stopped supporting certain prominent White supremacists and conspiracy theorists, Nick Lim has stepped in
Stopping the Race to the Bottom on Taxes
The U.S. is energizing a global effort to put a floor under corporate tax rates
The Guggenheims Of NFTs
Perhaps you’ve heard of nonfungible tokens? These collectors already have millions of dollars’ worth
Reincarnation And Realpolitik
China, India, and the U.S. are vying to influence the selection of the next Dalai Lama
WAITING FOR ELON
It’s not easy to compete with Miami and Austin for high-tech jobs. But Adelanto, Calif., which boasts a light regulatory environment, an enthusiastic city manager, and plenty of dirt, is giving it a shot
LAW & CRYPTO
Arthur Hayes faces U.S. prosecution over how he ran his overseas Bitcoin exchange
In Hot Pursuit
Chris Urmson’s company, Aurora, has merged with Uber’s self-driving unit to take on Waymo
Camille François Chief innovation officer at Graphika
TAIWAN CHIP MAKER TSMC TO INVEST $100B TO GROW CAPACITY
Major Taiwan computer chip maker Taiwan Semiconductor Manufacturing Co. plans to invest $100 billion in the next three years in expanding its manufacturing capacity and supporting research and development, the company said Thursday.
Identities: Kathleen Hou
Swallowing Our Bitterness The quiet costs of being Asian in America.
A Silicon Curtain Descends
Trump escalated America’s war against Huawei and China. Biden should beware burgeoning technonationalism.
WHY HONG KONG'S PROTESTS TURNED VIOLENT
THE ESCALATION IS PART OF A STRATEGY TO UNMASK CHINA’S ABUSES BEFORE THE WORLD.
SCORCHED EARTH: WHAT DOES YOUR BIKE CO$T THE PLANET?
Manufacturing is the elephant the room, but weighing the true environmental costs of overseas vs. domestic production isn’t as simple as it sounds.
Calvin Teng - Peace of Mind
As a Taiwan native, Calvin started as a self-taught painter in realism.
What China Wants
Chinese leaders’ combination of superiority and insecurity is growing more dangerous. The U.S. needs a new strategy to reflect that
Hot Spot for Health
Taiwan’s high-tech hospitals attend to increasing numbers of medically minded travelers.
REINING IN RUGGED TERRAIN
We drive Federal’s new Xplora R/T rugged-terrain tire