Commentary
-
Our commentary partners will help you reach your own conclusions on complex topics.
Hello from Crater Lake. That’s the Grand Tetons that you can’t see in the background. I promised you that I was going to talk about something that concerns me and that is the semiconductor supply chain.
Now, as you all are well aware, we are facing a severe shortage of semiconductors for pretty much every industry right now, with the exception of personal electronics.
And if you’re looking to something to blame for that, blame COVID because last year when we were all under protracted lockdown, none of us went out and bought cars.
None of us went out and bought fridges.
We all bought new phones and new iPods and new computers.
So all of the semiconductor fabs around the world, retooled to maximize their output for those particular product classes. And now we need to retool back for everything else that we use semiconductors for, which is pretty much everything.
The industry that is hit the most by this is automotive. There’s on average, over a thousand dollars worth of microchips in every car. And the more advanced the car, the more you got. Tesla’s are practically built out of things. So how do we switch back?
Well, we are switching back. We started switching back six months ago, but here’s the problem.
Semiconductors are not like any other manufacturing. In any other place, you’re going to have all kinds of small and medium-sized businesses who are building all kinds of components.
And then those are put together into larger components and ultimately assembled into the end product. It doesn’t work that way with semiconductors.
With the standard system, if one small company retools and goes out of business, someone else can step in and pick up the slack, or a new firm will form.
But with semiconductors, it’s all clean room work. And so it all has to be done in the same physical location.
So they take the Silicon powder, they melt it into a liquid.
They draw that liquid into a crystal.
They slice that crystal into wafer discs.
They then etch the disks, dope the disks, bake the disks, break them apart, and ultimately assemble them into whatever the intermediate product is all under one roof.
That process from start to finish takes six to nine months based on the degree of complexity of the semiconductor.
So when the semiconductor fab started switching back six months ago, we’re only now getting the first runs from that hitting the market.
And it’s going to be another two to four months before those first ones ultimately make them into final products that you can purchase.
So you’re really talking ultimately about a nine to 12 month lag.
Okay. We will get through this. The retooling has already been done. The supply chain is up and running again.
My concern is for the future now with rare earth metals, there’s so many places you can get the ore, and the processing is based on technologies from the 1920s. It’s really easy to do. There’s just a little bit of a lag to set it up, but with semiconductors not all fab facilities are created equally.
The Chinese do the low end stuff like a smart spatula.
The Koreans, the Taiwanese, and the Americans do the really high end stuff.
The stuff that goes into like your phone, it’s that middle ground. That’s the problem.
The middle ground that goes into say automotive comes from Thailand and Malaysia.
Now the Biden administration is putting tens of billions of dollars behind a program to bring semiconductor manufacturing back to the United States.
But he’s not going after the stuff that’s in Thailand, and he’s not going after the stuff that’s in Malaysia.
He’s going after the stuff that Americans have the quality advantage.
That’s the high end that’s competing with Taiwan, Korea, and Japan. That’s not where the shortage is.
Also when people say, you know, bring semiconductor manufacturing back from China. No, that’s not the stuff we want. That’s the low-end stuff. That’s the stuff you would subcontract out anyway. And besides most of it’s not designed in China, it’s designed here.
Most of the stuff that’s designed or that goes into automotive in Thailand, Malaysia is designed here.
And a good portion of the stuff that goes into the Taiwanese semiconductors, which are some of the best in the world are designed here, bringing this all under a new manufacturing umbrella is not something you do in six months or nine months or 12 months or 24 months or 36 months.
So if I’m right about the future of the global trading system, and it really does break down, the United States is going to have to do one of two things. Number one, it’ll have to go down market with semiconductors. And that means building a lot of $10 billion fabs as quickly as possible, and as quickly as possible is probably two years, that’s a long time to go without automation in automotive.
Option number two — United States might not care about the world anymore, but we’re probably going to care very much about Southeast Asia. And it will be critical for the United States to maintain a security and economic and diplomatic presence in that part of the world in order for this portion of modernity to continue.
That’s a hard call for a country that is turning sharply isolationist more by the day. All right, that’s it for me until another mountain bye.
-
How could RFK Jr. impact 2024 election?
Many Americans speculated about how a potential RFK, Jr. campaign might impact the 2024 elections. While RFK is neither a Democrat nor a Republican, many of his positions favor Donald Trump’s base over Joe Biden’s, particularly his various conspiracy theories on a wide range of subjects. Straight Arrow News contributor Peter Zeihan says that GOP…
-
Global warming won’t impact Russian-Chinese shipping
The seas above Russia’s northern coastline are too frozen for shipping, but some have wondered whether global warming might change that in the decades to come. If those seas were to become navigable for commercial shipping, new direct routes between Russia and China could theoretically open up. Straight Arrow News contributor Peter Zeihan throws more…
-
Can other nations replicate success of US shale revolution?
The “shale revolution” has provided the United States with a bountiful domestic supply of oil. But extracting oil from shale is a highly technical process, and it is also dependent on specific geological formations. Straight Arrow News contributor Peter Zeihan tackles the question of whether or not other nations might be able to replicate the…
-
Peace between Israel and Iran, at least for now
A series of recent airstrikes between Israel and Iran inflamed fears of a wider regional war erupting in the Middle East. That concern now seems to have paid off, after third-party countries around the world successfully intervened and talked down military hardliners in both Israel and Iran in order to avoid such an outcome. Israel’s…
-
Global internet in a precarious state, but that could be a positive
Over 500 underwater cables span over 870,000 miles worldwide, serving as the foundation of the modern global internet. Despite their critical role in facilitating communication, these cables often go unnoticed, even as the amount of data transmitted through them has surged. So what happens if the cables fail? Straight Arrow News contributor Peter Zeihan contends…
Latest Stories
-
China permanently deploys warships to second overseas base
-
France needs air defense for Paris 2024 Games, asks Greece for help
-
US troops begin building pier Gaza aid just days after mortar attack
-
New CISA cybersecurity measures to fight ransomware raise privacy concerns
-
How Mexican president’s cheery claims about drug cartels denies reality
Popular Opinions
-
In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum.
Latest Opinions
In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum. We hope these different voices will help you reach your own conclusions.
The opinions published in this section are solely those of the contributors and do not reflect the views of Straight Arrow News.
Latest Commentary
We know it is important to hear from a diverse range of observers on the complex topics we face and believe our commentary partners will help you reach your own conclusions.
The commentaries published in this section are solely those of the contributors and do not reflect the views of Straight Arrow News.
Peter Zeihan
Geopolitical StrategistGlobal warming won’t impact Russian-Chinese shipping
Can other nations replicate success of US shale revolution?
Peace between Israel and Iran, at least for now
Dr. Frank Luntz
Pollster and Political Analyst‘Take the job seriously’: Why Americans are fed up with Congress
‘If we can shrink it, it will stop growing’: Americans talk debt, deficit
‘I don’t think they care’: Undecided voters explain their reasons
Pete Ricketts
U.S. Senator for Nebraska