The flapping of a butterfly's wings can be felt on the other side of the world. This Chinese proverb is being fulfilled in 2021 in the technology sector and the aftershock of the earthquake is being felt in other industries.
Covid-19, cryptocurrency mining, the advancement of the cloud ('cloud computing') and the sales of 'smartphones', together with a historic drought in Taiwan, the world's chip manufacturer, have highlighted the global shortage of these components, a problem of the first order.
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The worst unemployed, but not the only one, has been the automotive sector. Several of its main factories have had to temporarily close in the United States and Europe due to lack of supplies.
In the US, vehicle production fell 4.3% in April, while in Spain the Stellantis plant (formerly Grupo PSA) in Vigo has suspended its 'sine die' lines and Toyota will do the same in Japan for part of June.
If the pandemic paralyzed the industry last year, the lack of sufficient supply of semiconductors now threatens the recovery. The fall in these supplies - which may not normalize until 2023 would cost the automotive industry alone in 2021 close to 110,000 million dollars.
And would reduce its world production by 3.9 million vehicles, in addition to 42,000 jobs at stake, according to estimates the consulting firm AlixPartners.
What is a Semi-Conductor?
A semiconductor is any material that becomes a conductor by allowing the passage of an electric current or, also, preventing it. Silicon and germanium are the most used materials to make them, although the industry makes use in other cases of sulfur, boron or cadmium.
Since their invention in the late 40s, the most important application of these chips (as they are popularly known) is the manufacture of transistors, a real revolution then, especially in consumer electronics.
Today they are present, among others, in 'smartphones', calculators, computers, televisions, as well as all kinds of vehicles. And experts warn of a possible increase in their prices (from 1% to 3%) due to the lack of semiconductors.
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The automotive industry works with processes 'just in time' (just in time), which are characterized by a lack of supply in order to reduce costs.
The closure of factories forced by the pandemic exacerbated this problem, while the growing weight of electric cars has further evidenced the dependence on semiconductors.
Meanwhile, the technology industry, boosted by a greater demand for computers and video consoles during confinements, demanded during those months the chips that the automotive industry previously required.
With the progressive return to normality, manufacturing has been unable to meet so much demand and thus began the first chapter of the 'Chipagedon', as the experts have baptized this atypical situation that the planet is experiencing due to the lack of semiconductors and whose origin of the problem sits in Asia.
Like a football trident, Taiwan, South Korea and China score the goals in the semiconductor arena. The first, a small Asian island with just over 20 million inhabitants, has the chip-making champion in the TSMC group. In 2020, the country accounted for 22% of world production.
It is followed by Samsung, as the South Korean company built 21% of the semiconductors that went on the market last year. The two share almost half the market, but China is still missing. In 30 years it has gone from 0% to 15% in the world manufacturing quota, even overshadowing mighty Japan.
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A meteoric rise that will lead him to reign in the sector in just nine years, according to forecasts. Other giants such as the American Intel and Qualcomm, or the Dutch ASML, barely keep up the Asian pulse.
Millionaire Investment
Since April, the EU has been studying creating an alliance of European semiconductors that would include firms such as STMicroelectronics, NXP, Infineon and the manufacturer of extreme ultraviolet technology (EUV) equipment, the aforementioned ASML, to reduce dependence on foreign chip manufacturers.
The community roadmap goes through the development of a plan that allows the different governments of the Union to provide financing to these companies to achieve, at least, that their market share in this sector increases to 20%, double what that it holds now.
"To be leaders and not followers, EU industry needs urgent and ambitious action on digital technologies such as semiconductors, cloud, quantum, space connectivity and batteries," says Thierry Breton, Commissioner for the Internal Market.
But the development of a factory that produces the 3 and 5 nanometer devices - almost as fine as a human hair - that the market demands could take three to four years, in addition to the investment would be around 15,000 million euros.
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Despite these figures and deadlines, Europe is working on it and plans with TSMC to build a plant in the Old Continent, a bet that Intel has joined separately, asking Brussels for about 8,000 million euros in public aid to build another factory.
To all this must be added the cost of developing semiconductors. According to the consulting firm McKinsey, the R&D costs for the development of a chip have multiplied by almost 20 times and those of construction of its nodes by another 13.5 times.
All in all, semiconductor sales have not stopped growing: almost 18% in the first quarter.
