Tag Archives: Semiconductors

The US Chip Blockade against China Is Creating Unplanned Consequences, by Mihai Macovei

Posted on November 28, 2022 | Leave a comment

Without fail, when governments interfere in private market, things don’t turn out as planned. From Mihai Macovei at mises.org:

The US trade and tech wars against China continued under President Joe Biden, who escalated export controls related to technology. The US wants to cut China’s access to advanced semiconductors and the equipment used to manufacture them in order to prevent their use for military purposes. The restrictions follow the CHIPS and Science Act, passed in August 2022 which showers $52 billion in subsidies on the US chip industry and grants over $200 billion in additional research and development (R&D) and science funding.

The alleged purpose of the US protectionist moves is to strengthen “national security” as revealed by the recent strategy, which singles out China as the main challenger to the world order upheld by the US. President Biden warned that the US faces a “decisive decade” in its rivalry with China in order to preserve a long-term competitive edge. Yet, a deeper analysis shows that the US policy is rather meant to contain China’s overall technological and economic progress. It also reveals the US government intentions to depart further from free-market solutions to bolster its economy, which reduces economic welfare and stokes the risk of military confrontation down the road.

US Dominates the Global Semiconductor Value Chains

Alarmist views that the US semiconductor industry is in need of subsidies and trade protection are not supported by facts. The US has remained the global semiconductor market leader, with almost 50 percent of annual sales since the late 1990s, despite a gradual decline in its share of chips manufacturing (graph 1). Most important, manufacturing represents less than one fifth of the semiconductor production chain and the US dominates the top end of the overall supply chain.

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The Mind-Blowing Stupidity Behind the $280 Billion ‘Chips for America Act’, by Rob Smith

Posted on August 2, 2022 | Leave a comment

A bunch of hack bureaucrats and politicians who wouldn’t know a microprocessor from a microscope think the government can “help” the semiconductor industry if they just throw enough money at it. From Rob Smith at realclearmarkets.com:

The Mind-Blowing Stupidity Behind the $280 Billion 'Chips for America Act'

Tima Miroshnichenko

It was a beautiful midsummer late afternoon. I had just checked into the “Inn” in Woodstock, Vermont. I grabbed my fly rod and hurried over to a picturesque covered bridge and waded down into the cool rushing water. I stuck a $20 cigar (spiced Maduro wrapper) in my mouth. With long sweeping rhythmic motions, I cast the fly wherever I wanted. It was a scene out of a Norman Rockwell illustration. Could life be any better?

After an hour or so, an old codger with a thick New England accent approached me and said, “there haven’t been any fish in this brook for 50 years.”  In the south, we use “creek” to describe any tributary flowing off a river. At first, I was confused and merely retorted “Sir?” He repeated himself. Even though I hadn’t caught anything, I was enjoying myself, but now the fun was over, so I limped back to the Woodstock Inn. Had he not told me there were no fish, I would have stayed in that spot until well after dark and would have thoroughly enjoyed every cast!

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The Manufactured Chip Crisis, by Eric Peters

Posted on September 7, 2021 | Leave a comment

The car companies’ chip crisis wouldn’t be nearly as severe if cars didn’t have so many unnecessary chips. From Eric Peters at ericpetersautos.com:

The trade publication Automotive News reports that new car buyers are “losing patience” with the dearth of new car inventory caused by the dearth of new “chips” needed to run the systems all new cars are afflicted with.

This problem could be solved at a stroke – by building cars again, rather than very pricey (and very disposable) mobile phones.

Cars don’t need “chips” – to be cars. They have them. This is an important distinction. They have “chips” – the Lego Blocks of computer-controlled cars – so as to control the car’s systems with computers, which now spider-web the entirety of the car’s systems.

The very first “chips” were simple – and local. They were transistorized modules that began to replace mechanical ignition contact points within the distributor that timed and transmitted the spark that fired the air-fuel mixture within the engine’s cylinders.

This made ignition systems more reliable and greatly reduced the need for regular maintenance, since it was no longer necessary to regularly check and adjust the clearance between the contact points – or replace the points when they wore beyond specification. Some people lamented the passing of points into the history books (along with road draft tubes) but, on balance, the changeover was a clear boon for most people.

The next step was computer-controlled fuel delivery, first of carburetors – this was in the late 1970s and early 1980s – and then by getting rid of carburetors altogether in the late ’80s and replacing them with electronic fuel injection. This entailed electronic control of the fuel injection and ignition system, which had to work together to work effectively.

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Intel & TSMC on Chip Shortage: After Blowing $84 Billion on Share Buybacks since 2011 and Now Woefully Behind, Intel Clamors for $50 Billion in Subsidies for US Chip Industry, by Wolf Street

Posted on May 4, 2021 | Leave a comment

Who cares if your company falls behind in its main line of business if you can borrow a lot of money and buy back your stock to keep its price going up, especially when you have lots of stock options? From Wolf Richter at wolfstreet.com:

“We will not be anywhere near as focused on buybacks going forward as we have in the past”: Intel’s new CEO.

US semiconductor manufacturing has declined to where it is now only 12% of the world’s total, said Intel’s new CEO Pat Gelsinger in an interview with CBS on 60 Minutes. “And anybody who looks at supply chain says, ‘That’s a problem.’” It’s a problem, he said, “because relying on one region, especially one as unpredictable as Asia,” where 75% of the chips are made, “is highly risky.”

And Intel, which made $63 billion in net income over the past three years combined, “has been lobbying the US government to help revive chip manufacturing at home – with incentives, subsidies, and-or tax breaks, the way the governments of Taiwan, Singapore, and Israel have done,” Gelsinger said. This lobbying came after Intel had incinerated $84.5 billion in share buybacks since 2011 (data via YCharts):

The success of Intel’s lobbying became clear in late March when the White House unveiled $50 billion in subsidies for semiconductor makers in the US to address the shortages and US exposure to foreign chip makers, as part of its $2 trillion infrastructure plan. The subsidies for the semiconductor industry have bipartisan support in Congress, the White House said. Corporate subsidies have nearly always bipartisan support.

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Watch The Wafers—-The Global Semi-Conductor Demand Has Collapsed, by Andrew Zatlin

Posted on January 29, 2016 | Leave a comment

From Andrew Zatlin at Moneyball Economics via davidstockmanscontracorner.com:

Collapsing demand for silicon wafers is signaling further global economic slowdown.

Silicon wafers are the raw material used for semiconductors. It’s the pig iron that gets turned into steel, the concrete that becomes roads. Except that semiconductors have a far broader and deeper reach in the 21st century economy. That is, demand for silicon is a pure reflection of economic demand, but just slightly in the near future since that silicon has to be turned into semiconductors first and then integrated into things to then get sold.

Simply put, in a growing economy where production and durable goods demand is expanding, silicon wafer demand is growing.

As the chart shows, unit growth has collapsed to 0% year over year.

To continue reading: Watch The Wafers—The Global Semi-Conductor Demand Has Collapsed

 

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