Geopolitics Of The Global Microchip Shortage

The Global Semiconductor Microchip Shortage has Economic and Geopolitical implications that could potentially see the rise of China as the dominant new world power.

Today, applications for Semiconductor Microchips exist in practically all consumer electronics, Electric Vehicles, Medicine and smart appliances to name a few.

Reasons For The Semiconductor Microchip Shortage

Many factors have contributed to the Semiconductor Microchip shortage that we see today.

Most recently, the Covid-19 Pandemic led to surge in demand for personal computers, new phones and other Semiconductor Microchip dependant devices so people could work from home.

Companies also upgraded their digital infrastructure to enable remote working.

In addition, the rise of Electric Vehicles has resulted in increased demand for Semiconductor Microchips from Automakers leading to a shortage in Semiconductor Microchips.

Globalisation also contributed to the Semiconductor Microchip shortage because US Companies relocated their manufacturing operations to the East, particularly to China and Taiwan because of cheaper labour and production costs.

However, the end result is that Countries such as the United States that were once leaders in Semiconductor Microchip production are now lagging behind Countries like China and Taiwan who benefited from the investment and research in Semiconductor Microchip production in the past several years.

In addition, the Governments of China and Taiwan quickly recognised the importance Semiconductor Microchips to the future Global Economy.

As a result, there was a concerted effort and strategy to build Semiconductor Microchip production capacity in Asia at the same time US companies were exporting their own Capacity to the East in pursuit of lower production costs and profit.

Geopolitics Of The Semiconductor Microchip Shortage

Since we live in a digital world, today the world economy effectively runs on Semiconductor Microchips.

As such, the power to make and the ability to acquire Semiconductor Microchips will play a key role in determining which Countries will progress and which ones will stagnate in the near future.

The rise of 5g and Artificial Intelligence also means that access to the best Semiconductor Microchips is crucial for any Nation that wants to remain relevant as a World Power.

Moore’s Law which states that power of Semiconductor Microchips doubles about every two years means that the cost of remaining behind for any Nation would be exponential and potentially fatal simply because of the rate at which Semiconductor Microchip technology advances.

Today, the big three Microchip producers are Intel from the US, Samsung from South Korea and TSMC from Taiwan which China already claims as a part of the Chinese mainland.

China’s claim to Taiwan makes clear the Geopolitical complexities of the Semiconductor Microchip shortage because of concerns that China may attempt to take over Taiwan’s Semiconductor industry

The Semiconductor Microchip shortage is also important in the field of National Sovereignty because State Security is now dependant on digtial infrastructure run by Semiconductor Microchips.

For this reason, the US has accused China among other things of Security breaches and Intellectual property theft which has culminated in public standoffs such as the Hauwei debacle between China and the US.

Conclusion

Its clear that Semiconductor Microchips are the new Economic and Geopolitical security concern.

As such, all States need to ensure a dependable supply of Semiconductor Microchips which will mean investing in research, development and manufacturing.

In the final analysis, while the global Semiconductor Microchip shortage is a cause of economic and political sensitivity, it is also a reminder of our interdependent global economy as well as the effects of De-Industrialisation in the United States.

Today’s global Semiconductor Microchip shortage means that the consequences of De-Industrialisation in the US may potentially see the United States lose its status as the world’s dominant power to China over time unless the US restores its own Semiconductor Microchip production capacity.