A recent article in Wired goes into the reasons for the current worldwide integrated-circuit shortage, which is affecting everybody from videogamers to drivers who want to buy new cars, but can’t because the automakers can’t get enough chips.
Reporter Eric Ravenscraft says there are several interrelated reasons, starting with COVID-19. But underlying them is a more structural problem: the fact that over 60% of global semiconductor manufacturing revenue comes from factories in Taiwan, and a good portion of the rest comes from mainland China.
The economists will tell you that shortages happen when demand outpaces supply so fast that producers can’t keep up with consumers. As millions around the world transitioned to working from home, the demand for more laptops, webcams, and associated equipment soared.
At the same time, manufacturers were dealing with COVID-19 shutdowns and absent workers, although Taiwan managed to keep their total number of reported coronavirus cases under 1000 — until about a month ago, when their numbers shot up to the current figure of 12,000, according to the Worldometer coronavirus website. This does not bode well for the near-term future of chipmaking.
So even if semiconductor manufacturing had continued at its normal pace, we would have seen prices rise and supplies shrink simply because of increased demand.
Ravenscraft then turns to the fact that the Trump administration in particular enacted policies that are consistent with trying to start a trade war with China. The details are complicated, but the net effect on availability of chips was negative.
And because semiconductors are some of the most complexly-engineered things on the planet, you can’t just stop making one kind of processor one day and start making a different kind the next day. Millions of coordinated process steps, masks, and other details have to change for yield on a new product to rise into the profitable range, and that can take weeks or months.
Here in Texas where our Big Freeze in February knocked out power to a Samsung semiconductor plant in Austin for over a week, it took them on the order of two months just to get things going again. So chipmaking is not a turn-on-a-dime industry. Sudden increases in demand cause big problems with supplies that can last months or longer, as these seem to have done.
Looking at the big picture, the semiconductor industry has become as essential to the world economy as oil or even food. People can’t eat chips (not the silicon kind, anyway), but they are nonetheless vital to the way we live now.
I have dabbled in the history of technology from time to time, and now and then the occasion arises to determine the relative importance of a given technology to a given culture at a given time. The following thought experiment is useful: Suppose everyone woke up one morning and the technology in question had vanished off the face of the earth. How disruptive would that be to normal life?
Some technologies would not be especially missed: dental floss, for example. But as we found out in Texas last February, electric power is pretty necessary to normal life for most of us, and if all the semiconductor chips vanished out of our devices one fine morning, we would be arguably worse off than we were without electric power.
Cars newer than 1960s models wouldn’t run, nobody’s phones would work, businesses from mom-and-pop stores to Amazon would freeze up instantly and lose most of their records (how’s them apples?), and, well, it’s starting to sound like some descriptions of the consequences of an electromagnetic pulse that would result from detonating a nuclear weapon above the atmosphere, only worldwide.
Fortunately, short of divine intervention, we won’t have to suffer the global disappearance of semiconductor technology. But this little thought experiment shows how crucial it is to modern life, and how even a mild thing like a chip shortage can have extensive and surprising ripple effects.
The other factor that makes a chip shortage serious is the rapid pace at which new products overtake old ones. This is largely a circumstance of the industry’s own making, because anybody with billions of dollars tied up in a semiconductor manufacturing plant has to keep it running at a profit or lose their investment.
So markets have to be found for all those chips, and that is why you have to discard your old electronics even if you like them, because the rest of the world moves beyond them and you have to keep up or else just quit. And sometimes “old” means only a year or two.
Of course, the manufacturers would say that they’re just trying to make their customers happy, and there is some truth to that. But let me bring in a different voice from a different tradition.
Paul Kingsnorth is an environmental activist and writer who, after thirty years of activism and dabbling in Buddhism and Wicca, recently joined the Romanian Orthodox Church. As an activist, he saw problems with the way the world was going, as he puts it in the June/July issue of First Things: “We would remake Earth, down to the last nanoparticle, to suit our desires, which we now called ‘needs.'” Needs for semiconductors, for instance.
But after his conversion, he views Christianity as the history of man’s rebellion against God. The global issues he was so focused on formerly — climate change, economic inequality, and so on — he no longer views as problems to be solved, but as spiritual issues, consequences of sin. Toward the end of his article, he writes,
“In the Kingdom of Man, the seas are ribboned with plastic, the forests are burning, the cities bulge with billionaires and tented camps, and still we kneel before the idol of the great god Economy as it grows and grows like a cancer cell. And what if this ancient faith is not an obstacle after all, but a way through?”
The chip shortage looks like at most an annoying interruption of what we have come to regard as business as usual. But what if COVID-19 and its consequences form an opportunity for us, individually and corporately, to ask some questions about the whole set of assumptions that underlie that business? Maybe business as usual isn’t where we should be trying to go. But that is a discussion for another day.
This article has been republished with permission from Engineering Ethics.