The Semiconductor Shortages And Why Building Foundries Might Not Solve It All

Semiconductor shortages have been one of the big economic themes emerging in 2021, in our ‘light at the end of the tunnel’ pandemic stage. We have to mention the pandemic because that’s a proximate cause of many of the shortages and supply chain issues that have beset the semiconductor industry and many others. The Auto industry has been a headliner for having to shut production due to lack of semis. And with some grumbling between China and the US over Taiwan, the key role that island plays in the supply chain also looks like a vulnerability. On today’s episode, we attempt to navigate the economic, geopolitical, and investing implications of all this talk, while zeroing in on the supply chain and its oligopolistic, specialized nature. Topics Covered 2:30 minute mark – The shortage and Covid dynamics in semis 7:15 – Working through the supply chain itself 16:45 – The consolidation and specialization along the chain 20:30 – Distinguishing the auto industry’s demand needs, and the illustration of supply chain limits (or not?) 28:00 – The role of the hyperscalers and what would happen if we built fabs in the US 34:00 – TSM’s freezing effect on the China-Taiwan-U.S. relationships 37:00 – Don’t forget the pandemic effects 41:30 – China’s successes in the chip supply chain 44:30 – The U.S.’s limits as a consumer market 46:30 – Semiconductor market outlook in light of all of this 56:00 – Last political notes for context