The Great Computer Chip Shortage of 2021 is Just Heating Up, by MN Gordon

It’s a close question in a modern economy which product is more important: computer chips or oil. From MN Gordon at economicprism.com:

The great computer chip shortage of 2021 will likely get worse before it gets better.  This conclusion was reached following brief study and anecdotal review.

Moreover, while COVID lockdowns may have initially triggered the shortage, several decades of shortsighted decisions and simmering geopolitical tensions make it much more than a matter of fixing a few broken links in the supply chain.  Here’s why…

The world’s top two leading chip companies are Taiwan’s TSMC and South Korea’s Samsung Electronics.  These two Asian firms, combined, control more than 70 percent of the semiconductor manufacturing market.

The U.S., which was once a leader, lags behind in chip manufacturing after major – and shortsighted – shifts in the business models in the semiconductor industry over the last 15 years.  But this could change…assuming the U.S. government can bend the semiconductor market to better meet its will.

The global semiconductor shortage and geopolitical tensions with China have now prompted Washington scrutiny of the supply chain.  Suddenly, the U.S. government doesn’t like how semiconductor manufacturing is concentrated in the hands of a small number of Asian companies.  There is now a push to bring manufacturing back to American soil.

The U.S. government has earmarked billions of dollars and is reportedly looking at strategic alliances with other nations.  The U.S. government, however, has a terrible track record for economic intervention.  Typically, its approach involves throwing gobs of fake money at a problem and hoping it goes away.  Such an approach is destine for failure.

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