Science Ping

The world is paying dearly for being too dependent on a single chipmaking company

Given the world’s over-reliance on single-chip trading in the same way the world relies on Middle Eastern oil, any instability in the region has a ripple effect on many other industries. 

Taiwan TSMC Corporation chips are popping up everywhere, although most consumers don’t know it.

TSMC manufactures many of the most sophisticated chips in the world as well as many simpler chips. TSMC chips are used in billions of products including electronic devices such as iPhones, personal computers and cars, of course there is no indication that this chip is manufactured by TSMC. TSMC currently produces chips for many large companies such as Apple and Qualcomm.

In recent years, TSMC has become the world’s leading semiconductor manufacturer, TSMC’s influence on the world economy has grown. With an estimated market capitalization of $ 550 billion, TSMC is currently the 11th largest company in the world by market capitalization.

TSMC’s dominance in the global semiconductor industry puts the world in trouble. As more and more technology requires sophisticated chips, more and more chips are coming from a company on an island that is now at the center of tensions between the United States and China.

Analysts say it will be difficult for other manufacturers to keep up with TSMC in an industry that requires huge investment. TSMC also cannot produce enough chips to meet everyone’s needs, a fact that has become increasingly evident in the context of global chip shortages, worsening supply chain disruptions, prices. Sales to consumers and employees are increasingly higher, especially in the automotive industry.

The history of the world being too dependent on a chip manufacturing company is similar to how the world is dependent on oil in the Middle East, any instability in this region will have a ripple effect on many people. other sectors. Companies in Taiwan, many of which are small, accounted for about 65% of chip manufacturing revenue in the first quarter of this year, according to TrendForce calculations. TSMC, for its part, accounts for approximately 50% of sales in the global semiconductor manufacturing industry.

Research organization Capital Economics has argued that too much reliance on Taiwanese chips poses risks to the global economy.

TSMC Corporation, listed on the New York Stock Exchange, reported earnings of $ 17.6 billion on sales of approximately $ 45.5 billion last year.

Given its superior technological advantage, Capital Economics calculates that TSMC currently manufactures approximately 92% of the most technologically advanced chips in the world. Samsung makes the rest. Most of the 1.4 billion phone processors in the world are manufactured by TSMC.

According to IHS Markit, TSMC also produces around 60% of the microprocessors that cars need as their vehicles increasingly move towards automation.

The United States, Europe and China are currently trying to reduce their dependence on Taiwanese chips. Although the United States is still the world leader in chip design and intellectual property with many companies such as Intel, Nvidia or Qualcomm, the United States currently accounts for only 12% of the total global production of chips, a significant drop from 37% in 1990, according to the Boston Consulting Group.

President Joe Biden’s administration also recently launched a $ 50 billion plan to expand domestic chip production. China has made chip production independent in its strategy. The European Union (EU) aims to produce at least 20% of the world’s chips on its own by 2030 in its global plan of 150 billion dollars to develop digital industries.

The worst drought in more than half a century is now affecting Taiwan, adding additional stress to the island, which produces about two-thirds of the semiconductor chips in the world during the worst chipmaking crisis in decades .

So far, the impact of the drought on microchip companies has been limited as local governments prioritize water for these companies. However, the companies themselves are also making adjustments, with local officials warning that the water shortage could worsen.

Chip factories in Taiwan currently produce around 65% of all chips in the world, according to TrendForce calculations. Much of the chip production centers around TSMC, the world’s largest chipmaker.

“Taiwan is the center of the global chip manufacturing industry. Therefore, the situation which is already urgent will be even more so, ”said Syed Alam, head of chip production at Accenture.

Usually typhoons will help Taiwan to have enough water supplies. However, last year Taiwan did not have a typhoon, so the water supply became more limited, the local government was forced to adjust the water supply of more than one million businesses. and local residents.

Risks are heightened when the global chip supply crisis is severely affected by numerous natural disasters and the demand for semiconductor products by automotive and electronics companies around the world increases rapidly.

Bad weather in Texas earlier this year forced Samsung Electronics to shut down two chip factories in Austin. Auto chip maker Renesas Electronics in Japan, meanwhile, was hit by an earthquake in February and a fire in March, and output at its plant took months to recover.

Chip shortages have forced the entire auto industry to cut production, with Ford saying the shortage will cut production by around 1.1 million vehicles this year. Jaguar Land Rover Automotive Plc, Volvo Group and Mitsubishi Motors also recently had to partially close production lines. Apple also warned of supply constraints and a sharp decline in iPad and Mac sales.

Meanwhile, the president of the world’s largest TSMC chip maker – Mr. Mark Liu said he has been aware of the chip shortage since late last year and is trying to increase production for serving companies in the automotive industry. Production is now two months faster than the usual schedule, Liu said, and should be able to meet minimum customer demand by the end of June 2021.

Related posts

10 Guard dogs you don’t want to mess with.


Discovered 12 never-before-seen creatures on Earth hidden under sea ice in the Atlantic

Science Ping

Pretend to be a buyer to save the wild cats

Science Ping

Leave a Comment