Who Controls Microchips Controls the Global Economy!
The pandemic has led to millions of people relying on technology more than ever. From phones to laptops to televisions and much more, technology has become the center of our lives over the last year. Yet, one thing all modern technology has in common is the use of microchips. Now there is a shortage of Microchips and everyone is asking: How this may impact the economy?
Many, including Ford CEO Jim Farley, argued that the global microchip shortage, which has severely disrupted the automaker’s production for months, would be essentially over by Q3 of 2021. Recent assessment suggests that the global microchip shortage could go on for years.
Undoubtedly, the shortage has created major disruptions across many industries including auto makers, consumers’ electronics, and much more. What is certain, however, is that Chip stocks are trading at record highs amid demand spikes due to pandemic and other factors, but analysts say continuing short supply of semis are likely to send them higher despite memories of 2018 shortage that led to oversupply glut.
One expert likens it to one other commodity, oil, which saw its own share of geopolitical contentiousness. There are three main global chips producers: Intel from the US, Samsung from South Korea, and TSMC from Taiwan. They're considered companies at the industry's leading edge when it comes to making the world’s most advanced chips.
Of note: China is spending billions of dollars in order to decrease its dependence on tech imports; thereby also reducing its vulnerability to sanctions put in place in part to punish China and deter future belligerence like say towards Taiwan. And that's why chips are the new economic security and geopolitical flashpoint.
One can now understands why alarm bells have gone off on Wall Street and in the American national security community. This outcome prompted President the Biden to seek $37billion to boost chip manufacturing in the US. Will congress agree? Time will tell sooner than later, I hope.
David Oualaalou is a Geopolitical Consultant, Award Winning Educator, Veteran, Author, and former International Security analyst in Washington, D.C.