Newsletter #78 - Global chip shortage

Why South Korea is investing $450bn in microchips

From our mobile phones to fighter jets, the silicon microchips (or semiconductors) are not only the lifeblood of these things, but also of the economy of many countries. This week, we look at how the global shortage of microchips is affecting our businesses and lives.


👩‍💻 Global chip shortage: how it impacts us

  • How the chips fell - The global shortage of semiconductor microchips—essential components of electronic devices—has hobbled the automotive views and consumer electronics industry. Due to the pandemic, microchip production in semiconductor plants in China and around the world halted, which led to a lack of supply. [SCMP]
  • Asian squeeze on supply chains - While the US accounts for 47% of global chip sales, only 12% of chips are made there—the majority of chips are made in Asia. This means that the bottleneck lies with Asian chip manufacturers who need to meet rising demands for 5G phones and laptops. [Reuters]
  • Putting chips back on the table - Microchips are being dubbed as the “new oil” and analysts say the shortage could last until 2023. That’s why countries are now investing billions to secure semiconductors for the future: South Korea announced a push worth $450 bn while the US is pushing legislation worth $52 bn. [IEEE]
  • Why you should care - Everyday consumers will see a price hike for home appliances, consumer electronics (like PCs), and cars. Businesses will be affected even more, since they buy products at larger scales. Until manufacturers can successfully rebalance the distribution of chips, consumers might have to find alternative products or buy second-hand ones. [ZDNet]

🔍 Insights from Asia

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