You’re probably a big fan of Taiwan Semiconductor Manufacturing Company, right? What, the name isn’t familiar? But its microchips are, without which a great many of your devices would cease to function. Sure, we have Intel, but TSMC makes smaller, more complex microchips, and far more of them. Maybe you’ve never heard of the name, but you can’t live without them.
The supply chain for cutting-edge chips like those made by Taiwan Semiconductor Manufacturing Company is no better. Producing the newest five- or seven-nanometer chip requires billions of dollars in investment in specialized factories and a highly skilled labor force. As a result, there are relatively few facilities that make them. If one of these factories goes offline, as the Samsung operation in Austin, Texas, did for weeks after the Texas grid failure, there might be no other factory able to step in.
There are problems with manufacturing, raw materials and supply chain. But there are other problems as well, problems of sustainability and focus.
This dynamic — fewer and fewer companies engaged in fierce international competition — has made it prohibitively expensive to invest in robust supply chains. If two firms produce the same chip, the more “efficient” firm — the one focused on maximizing the return on every dollar invested, rather than on making sure production won’t be interrupted — will drive the other out of business.
At the moment TSMC has a huge lead in the international microchip biz, but the United States has only one microchip manufacturer in business, and its product isn’t as good. 60 Minutes did a segment on semiconductors and it revealed the fragility of manufacturing and supply chain.
COVID showed that the global supply chain of chips is fragile and unable to react quickly to changes in demand. One reason: fabs [microchip manufacturing facilities] are wildly expensive to build, furbish, and maintain.
Lesley Stahl: it used to be that there were 25 companies in the world that made the high-end, cutting-edge chips. And now there are only three. And in the United States? – You.
[Intel CEO Pat] GELSINGER HOLDS UP FINGER
Lesley Stahl: One. One.
Today, 75% of semiconductor manufacturing is in Asia.
Pat Gelsinger: 25 years ago, the United States produced 37% of the world’s semiconductor manufacturing in the U.S. Today, that number has declined to just 12%.
Lesley Stahl: Doesn’t sound good.
Pat Gelsinger: It doesn’t sound good. And anybody who looks at supply chain says, “That’s a problem.”
What if there was a war and we were unable to get microchips from Taiwan? What about a natural disaster that disrupted the supply chain? Why can’t we make them here, just as many and just as good as the products coming out of TSMC? What if we can’t? At the moment, we can’t. At the moment, COVID sufficiently disrupted the supply chain that there is a shortage. At the moment, we are at the mercy of TSMC.
Today’s shortage may well resolve itself as consumer spending shifts from pandemic-era electronics to dining and recreation in a fully reopened economy. But the disruption could also metastasize, affecting the production of medical equipment and consumer appliances. In either case, we need a plan for dealing with all contingencies. If private business won’t do it, the government can and should.
Can private business do it? Surely, that’s the way it’s supposed to work. If we need microchips, and we most assuredly do even if we hate what they’ve done to our world, then someone should open up a fab and make tons of them, perhaps in America so we have our own supply that isn’t subject to the vicissitudes of politics and nature. But in good times, we need to sell them to the businesses that need them, and they’re buying the better, smaller, cheaper chips rather than the “made in America” chips.
Why aren’t we making the better, smaller, cheaper chips? Those are not the dominant values of our workforce or our government, and to the extent management remembers why it exists, no longer within its ability to focus on the things that keep business alive. And if our microchip supply chain fails, will someone talking about you using the “wrong” pronoun be your immediate problem?
No comments:
Post a Comment