The global shortage of computer chips has halted the manufacture of cars, computers, and even Dog washing machines. But there are now signs that the shortage of chips – the little parts that act like the brain or memory of everything electronic – is over.
This might be a slice of good news for our budgets. It’s also an embarrassing moment for the Biden administration and US lawmakers who have lobbied for taxpayer funding for computer chips with a host of goals, including alleviating the shortage.
Some of these goals are reasonable. But putting up government money to fix the chip shortage has been questionable. Now it looks like a bug. Let’s talk about why:
Why are chips important again?
Computer chips are essential for smartphones, video game consoles, and other consumer electronics. We also use it in combat aircraft. in the ignition, brake and entertainment systems of automobiles; It tracks milk production from dairy cows.
As my colleague Don Clark explained last year, it’s no surprise that chips become temporarily scarce. What has been unusual over the past two years has been the unbridled mix of pandemic-related turmoil and our overwhelming desire to buy more things, resulting in a variety of shortages.
What has changed?
In recent weeks, computer chips have suddenly seemed plentiful. Many computer chip companies have warned that their sales Go from hot to no. Unused chips piling up in South Koreaa major manufacturing center, at the fastest rate in years.
The main reason is that people all over the world are not buying electronic devices like laptops, smartphones and televisions as much as they were a year or two ago. Many people are concerned about rising prices and the health of economies as they decline. So companies are reducing orders for computer chips that would have been incorporated into many products.
This is how the economy and computer chips work. When people are satisfied and spend a lot, chip factories ramp up to make way more. They always overproduce and there are a lot of chips. Some experts have said the pandemic mania will be followed by a meltdown in the chip. We haven’t gotten there yet, but we’ll see.
What does the Biden administration have to do with that?
I’ve written before about the consensus in Washington on increasing US government support for US chip factories and expertise. Congress has been debating — and still arguing — the details of spending more than $50 billion in taxpayer money to do just that. Most of the world’s most advanced chips are manufactured in Asia, particularly Taiwan and South Korea.
One of the stated funding goals is to help alleviate the chip shortage. And now? Nothing passes, and the shortage of some types of chips ends.
There are good reasons for American taxpayers to support the chip industry. Many experts point out the importance of building knowledge in America’s advanced chip manufacturing field. It’s not great that so many of the core chips are made in Taiwan, within China’s potential sphere of influence. The US military wants to make sure it has a continuous and measured supply of it. (There are US chip factories dedicated to this.)
But the mission of the US chip plan is incoherent. US officials and industries have presented a laundry list of benefits from US chip financing, including creating more US jobs, being able to compete with China and making it easier for US industries. Like car manufacturers to continue to produce their products.
The latter, frankly, did not make any sense. The harsh reality is that cars have to fight for space on chip factory lines against the most profitable chips for smartphones or other fancy equipment. Even if more computer chips were made in America, there’s no reason a chip made in Texas would only be used in Ford F-150s and not trucks from European or Asian companies.
The more justifications the government stuffs into its chip plans, the less clarity is what America is trying to achieve.
Understanding the global chip shortage
short supply. All over the world, industries are struggling because there are too few computer chips. Here’s what you need to know:
Read more from On Tech on computer chips:
Before we go…
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Twitter is suing the Indian government: My colleague Karan Deep Singh reports that the company opposes orders to remove certain tweets and ban accounts that India says violate the country’s laws. It is the latest confrontation between an American Internet company and the world’s largest democracy over the proper limits of free speech.
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This may be one of the biggest known breaches of personal data in China. My colleagues John Liu and Paul Mozor report that hackers are offering for sale a database of Shanghai police that could contain information on possibly one billion Chinese citizens.
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When the Hajj website fails: Saudi Arabia has directed Westerners to one website authorized by the government to book travel to the Islamic holy city of Mecca. Washington Post mentioned Technical loopholes have prevented thousands of people from performing the Hajj. (Subscription may be required.)
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