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Governments working towards the shortage of semiconductor chips


Many countries are entering into the production of their own semiconductor chips as there is a crisis of chips globally. Memory chips are used in a variety of products that include smartphones, gaming consoles like PlayStation 5, fridges & washing machines, alarm clocks & cars. They are used in data centers that are full of computer servers. Semiconductor chips are ubiquitous, many of the products require them. The auto industry is already facing the brunt as carmakers have stalled production due to global chip shortages. The chip shortage will continue till 2023. Manufacturing semiconductor chips is not a ball game for everyone as the process is intricate, capital intensive. The production takes weeks & the distribution takes an even longer time. The new supply takes years to come online as the factories need to have the proper technique. The production process for each generation of semiconductor chips is different. The new chips have bigger margins that give manufacturers incentives to invest in their production rather than increasing capacity for older generation chips. Cars require older generation chips. This is the reason that the auto industry is struggling. New supply is also entering the market as the biggest chipmakers- Taiwan Semiconductor Manufacturing Company, Samsung Electronics & UMC are investing in building new plants. China has set up multibillion-dollar national funds in order to invest in local chipmakers as it is preparing itself to compete with the US, South Korea & Taiwan. A tech & manufacturing bill was passed by the US that includes $52 billion to fund semiconductor research, design & manufacturing initiatives. The European Union has also decided to contribute its funds towards expanding the semiconductor industry. 

Source: CNBC

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