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Sep 5, 2021
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A critical shortage of microcircuits around the world?

“We’ve never seen anything like it before.”

General Motors Corporation (GM) is halting production at almost all of its factories in the United States due to a shortage of imported microcircuits (chips). The company has parked thousands of finished vehicles in warehouses for lack of the necessary microcircuits. New car prices are rising.

All of the world’s leading automakers have suffered from the chip shortage. In September, the world’s largest car manufacturer Toyota will reduce production by 40% (540 thousand cars instead of 900 thousand). Does not rule out “changes in production” due to “unstable and limited” supply of Volkswagen chips. Reduced production Ford, Nissan, Daimler, BMW, Renault

Other industries were also affected, with many electronics manufacturers including Apple Inc.cannot meet the demand for their products.

Microcircuits (chips) are found in almost everything that surrounds us, from mobile phones, computers and cars to washing machines, refrigerators and electric toothbrushes. “We’ve never seen anything like it before.”– says Patrick Penfield, professor at Syracuse University (USA).

Analysts at JP Morgan note that semiconductor shipments are currently 10-30% below demand and predict that it will take at least three to four quarters for supply to catch up with demand, followed by another quarter or two for inventory recovery.

Among the reasons for the worldwide shortage of chips in the West is called a “pandemic”, but the decline in chip production began earlier than it was announced.

According to Christopher Rolland, financial analyst at the company Susquehanna, the deficit is artificial. And it’s not about corporate collusion. Chipmakers have lost a lot since the end of the 2018 chip boom. There were a lot of unnecessary products in the warehouses, which quickly became obsolete, because the semiconductor electronics market is very dynamic. As a result, a serious recession began, especially affecting chip development companies. (Nvidia, Micron Technology, AMD)

The decline in demand for microcircuits in 2019 was caused by a general decline in industrial production. Last year’s UNIDO report (United Nations Industrial Development Organization, UNIDO) said: “In 2019, global production continued to decline steadily … In the fourth quarter of 2019 … industrial production in Germany, Japan and the United States fell 2.1% compared to the fourth quarter of 2018.”

British Independent cites Trump’s trade war against China as the main reason for the shortage of chips in the world. Washington, in particular, has banned leading Chinese tech giants Huawei and ZTE buy equipment for the production of microcircuits in the United States, and also banned the Dutch ASML sell their chip printers to China and banned Chinese companies from buying chip makers Micron and Aixtron

US banned companies in 2020 TSMC chip shipments for Huawei, and Chinese manufacturers began stocking up on chips. Leading Chinese chipmaker was later sanctioned Semiconductor Manufacturing International Corporation (SMIC)… US investors were banned from trading in the company’s shares. In the spring of 2021, several congressmen demanded a ban on the sale of any semiconductor development software to China.

Aims of the U.S. trade war against China over the chip industry leading U.S. trade magazine EE Times calls “The desire of American chip manufacturers, who at one time abandoned their own production, to change course and return chip production to the United States”

In 1990, 37% of chips were made in America, and in 2020 – only 12%. Now the world leaders in the production of chips are a Taiwanese company Taiwan Semiconductor Manufacturing Company (TSMC) and South Korean Samsung… The first takes 54% of the market, the second – 17%.

Thomas Sonderman, Executive Director Sky Water Technology, says China is still years behind the US in semiconductor manufacturing, but is in a rush to build a competitive chip industry and is projected to be a serious competitor by the end of the decade.

The Chinese began to dramatically increase their chip production since 2017. According to Dan Hutcheson, chairman VLSI research and Lead Chip Analyst, writes Financial Timesthis seriously worries America and “Finally, the United States decided to assert itself”

The artificial shortage of chips in the world has become one of the tools for such self-affirmation. Against the background of the rush demand for microcircuits TSMC, the share capital of which includes American Vanguard and Jp morgan, the company raised prices for its products by 20%, achieved record profits, which will help it build ultra-modern chip factories in the United States, (microcircuits TSMC are used in a wide range of products from artificial intelligence systems to F-35 fighters).

Simultaneously, American investment giants such as Vanguard and Black rockare shareholders of all corporations Big Pharma… Therefore, the version that the “pandemic” has become one of the reasons for the global shortage of chips has a right to exist. American investment funds are making money both on vaccinations and on the rise in chip prices.

Another reason for the global shortage of chips is the desire of Western corporations to revive the market. “The crisis is 100 percent artificial. Constantly falling prices for microelectronics and component base have greatly sagged the industry over the past 10-15 years, European and American microcircuit manufacturers have seized the opportunity and are trying to turn the price trend up “, – industry experts write at Russian specialized forums.

Let us emphasize that American corporations are fighting their competitors not only using “civilized” methods. The production of semiconductors has been affected by a series of “completely random” industrial accidents. In March 2021, there was a fire at one of the enterprises for the production of silicon wafers. Renesas in the Japanese prefecture of Ibaraki, the world’s third largest manufacturer of car electronics. The company produces silicon wafers for the production of chips. The full-fledged work of the enterprise was restored only three months later.

In June 2021, the company’s industrial zone caught fire in the Chinese city of Shihezi. Xinjiang West Hesheng Silicon Industry Co., Ltd. Its silicon is used for the surfaces of solar cells, and after being recycled in the manufacture of silicon wafers for chips.

The growing shortage of chips and their price gouging also contributed to the allegedly accidental power outage at TSMC in April of this year, seriously disrupting production.

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