Silicon Chip Shortage Now Blamed On The Vaccine

I was reading up about the shortages being experienced by companies like Home Depot and how business has changed over the last year. The biggest problem and it is a global problem is the computer chip shortage. If you just take a moment and think virtually every appliance or motor vehicle has one as everything is electronic needing a brain to drive it. Home Depot was struggling to acquire home appliances like fridges and freezers due to no computer chips. With more people spending time at home demand for things like freezers shot through the roof.

Originally the excuse for the shortages was down to Covid and factories shutting down ,but that is only part of it. It turns out the vaccines being made world wide have their vials/tubes made out of silicon which happens to be the same silicon the semi conductors or chips are made out of. How screwed up is that?

How bad is the situation you might ask as this isn't a shortage, but a major catastrophe that ripples across virtually every manufacturing industry. Samsung is the second largest manufacturer of chips and also the second largest user of chips and they don't have enough for themselves.

Apple spends in the region of $60 Billion per year followed by Samsung on roughly $40 million making the other companies in the queue less significant. Not small companies when we are talking about the likes of Ford, Volkswagen and Toyota. The entire motor industry spends roughly $40 Billion per year on chips and as they are separate entities they are small fish at the back of the queue. Toyota only spends $4 billion so this is understandable when others are 10 times or 15 x bigger.

Ford and Nissan has already reduced manufacturing, cutting back on shifts and stalling production. General Motors is expected to be hit with a $2 Billion loss this year. This is fairly serious and when you think about it they can only blame themselves for relying on another company providing them with crucial components.

Out of the whole group Samsung seem to be the smartest as they manufacture and sell the chips plus provide for their own electronic goods. Intel is the biggest in the world manufacturing $80 billion dollars worth per year. The United States manufactures roughly 12% of the world market with Asia way out in front on 75%. What I find ludicrous is Intel is an American Company yet the Government allowed a crucial manufacturing business to set up overseas. This is something you protect at all costs as the cost to the economy is going to be gigantic. I know other countries step in and offer subsidies or tax cuts to keep certain businesses at home.

To set up a plant it takes a good two years and it is about time countries get their priorities in order. Certain items that are crucial to the industry should always be made at home and not left in the hands of others. Who knows when this shortage will be over as the demand has outstripped supply with hefty backlogs. Price increases are guaranteed as there have been two already this year