Chips: Yes There Is a Difference

Back in ’92, Michael Boskin, then Bush 41 economic advisor, said it didn’t matter whether a country produced potato chips or microchips. Guess what?

By Gary S. Vasilash

“CEO Summit on Semiconductor and Supply Chain Resilience.”

That’s what a meeting held yesterday in Washington and Cyberspace was named, which included CEOs from a number of companies, including General Motors, Ford and Stellantis.

The point is that there is no resilience in the supply chain for semiconductors.

Evidently it is something that hadn’t been deemed to be necessary.

But then there was the pandemic.

Then people suddenly started working from home. Students started studying from home.

And there was a recognition that—oops!—the home compute equipment wasn’t (1) up to snuff and/or (2) not in sufficient numbers to accommodate the whole family.

Meanwhile, people at companies like Sony and Microsoft were busy working on their new gaming consoles. And things like PlayStations and Xboxes require sophisticated microprocessors.

The auto industry shut down for a couple of months last year. There were thoughts that it would be down for longer.

When you’re not making cars and trucks you don’t need lots of things, from steel to tires to. . .semiconductors.

But the auto industry came back.

And the number of semiconductors on the shelves began decreasing—and not replenished just-in-time, or at any time.

Some vehicles were built without control modules that would be added later. Which is not exactly a tenable way of doing things.

So factories were put on hold. When you don’t have the parts, you can’t build the vehicles.

Consequently, the meeting in Washington.

Within the Biden $2-trillion infrastructure plan there is money—some $50-billion—for semiconductor manufacture.

Odds are, the $2-trillion infrastructure plan is going to remain just that. A plan. It is going to be difficult to get sufficient support to pass it.

President Biden told attendees at the meeting that there is bi-partisan support for addressing the semiconductor dearth.

There ought to be. Left or right, urban or rural, 99% or 1%–this country’s infrastructure is predicated on private vehicle drivership and everyone needs one (or economic access to one).

As vehicles get more technologically sophisticated, the number of chips needed is only going to grow.

If this issue isn’t significantly and substantially addressed, then not only is this going to affect the vehicle manufacturers, but everyone who would like to get a new vehicle.

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