New reports from officials in the U.S. suggest that the ongoing chip shortage, where manufacturers struggle to get microprocessors for things like cars and consoles, may have blunted GDP by 1%.
“The best estimates are the lack of available semiconductors probably took a full percentage point off of GDP in 2021,” said White House National Economic Council Director Brian Deese Wednesday, according to coverage by David Shepardson for Reuters. “(The briefing will) provide (analysts) with our latest analysis from the intelligence community and Defense Department around the core vulnerabilities and risks to our economy and national security.”
The White House is asking for a package of $52 billion to spur domestic production
“The risks are profound,” Deese said of severe disruption threats, “(based on) economic moves by key competitors — most notably China around the escalating vulnerabilities we have from the semiconductor issue.”
Shepardson reports the U.S. now accounts for 12% of new microprocessor manufacturing, where that number was 40% in 1990.
It’s not just declining domestic sourcing, though – over the past couple of years, we have documented how some of the first rumblings of the microprocessor shortage emerged from trade tensions between the US and China, and how the pandemic exacerbated an existing problem.
We’ve also noted how new technologies and ever more technically prolific products have driven enormous demand for a type of product that’s in short supply.
Lately, we’ve seen automakers like Volkswagen start to say that they see themselves clawing out of this within a year.
But if the impact to American GDP is that big, it creates a real sense of urgency on this side of the Atlantic.
Some distributors are suggesting that strategies like timing and embrace of global expansion can help companies to weather the storm.
“When expanding your sourcing beyond your standard suppliers, a lot more product is suddenly apparent,” writes an analyst at A2 Global Electronics and Solutions. “The challenge, however, is that you cannot sacrifice quality and risk-mitigation best practices when demand is not met by normal supply channels. This can raise the uncertainty and risk in your sourcing process. Finding a sourcing partner with infrastructure, lab facilities, and highly qualified personnel standing ready to test your components’ integrity can ease the timing concerns around quality assurance.”
Keep an eye on how this is affecting companies like Taiwan Semiconductor – and industry peers stateside.
