A well-documented effect of the pandemic has been an ongoing semiconductor shortage across a range of industries. As chip fabrication companies race to meet demand, the price of chips has steadily risen.
Now the largest chip manufacturer in the world has announced plans to raise prices to help pay for a massive investment in new chip research and manufacturing capacity. Taiwan Semiconductor Manufacturing Company (TSMC) controls more than half of worldwide chip fabrication and produces the most advanced chips in the world for companies under contract. TSMC announced plans to raise chip prices 10-20% starting in October.
Companies based in Taiwan, including TSMC, control more than 60% of the world foundry market, with the market share in Asian countries at about 80%. Conversely, the worldwide share of U.S. semiconductor manufacturing has fallen from about 37% in 1990 to 12% in 2020. A large portion of this relative decline is due to massive government incentives that have benefited global competitors. Semiconductors were invented in America at Bell Labs after World War II.
The largest U.S. based chip fabricator is GlobalFoundaries. It generally makes chips of older designs for other companies on a contract basis. U.S. based Intel is one of the few companies that still designs and manufactures its own chips, including those utilizing some of the most advanced technology. Intel has recently announced a large manufacturing investment, including plans to create a contract manufacturing division. Commercial chip fabricators currently operate in eighteen states and semiconductors are the fifth largest export in the nation.
Although the U.S. still leads in chip design, specialty processes and other components of the industry, governments around the globe are investing to secure more domestic semiconductor technology, capacity, and sovereignty. This race for worldwide tech supremacy will have major implications on how well countries can meet the needs of their domestic industries and provide the basis for national security. The technological edge that any country possesses depends upon the resilience of the semiconductor industry. Enjoy the stories below for more insight!
~ Brian Kasal- The Leadership Matrix
If you enjoyed this post, please consider sharing it on your favorite platform below.