Consumerism is a fascinating question as it brings us to the question of finished goods which the consumers are willing to purchase.
But, in the race to accelerate the concept of consumerism, most of the time, we forget to consider the raw materials, components, parts of the finished goods that define consumerism.
This article will try to study one such component without which digital acceleration would be futile. It is the chips and specifically computer chips.
Taiwan is the country that produces the most number of chips globally, thanks to TSMC – Taiwan Semiconductor Manufacturing Company, which controls 51% of the global chip market.
Let there be no doubt that the fusion of hardware and software is accelerating in America, but when it comes to producing chips of any kind, Asian countries dominate the chip market, which includes the supply chain as well. As a matter of fact, many American companies rely on Asian countries for Chips to meet their manufacturing needs.
In a nutshell, it is a complicated valuation process for computer chips, and it is challenging to decipher every aspect of it. It deals with a global problem because of the lack of competition and maximum supply chains.
This article will be covering up some of these elements but first, let us answer the one big question:
Which country produces the most number of Computer chips?
Taking the Wall Street Journal report into account, Taiwan is the country that is currently producing the most number of chips in the whole world.
Taiwan Semiconductor Manufacturing Company (TSMC) holds 53% of the Global Semiconductor Foundry market(Q2 2021). It manufactures all kinds of chips, from simple to complicated to technology bound. It is currently the company which the world is relying on for chips.
TSMC manufactures chips for various companies which don’t manufacture chips but design them, such as Qualcomm Inc and Apple Inc.
The chips produced by TSMC are built for various electronic devices like iPhones, cars, etc.
Other companies are equally big, but they produce specific chips for specific purposes, and this is why they don’t qualify as the largest computer chips manufacturing company.
TSMC holds the capacity to produce all kinds of chips, which is why companies like Apple rely on it.
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Dominance is one thing, and the repercussions of it are another. The implications of one company dominating the supply chain of the chip market are a matter of great concern and must be studied.
It is evident that economic implications serve as a significant reason for this topic to be addressed but more on this later.
Why are Computer Chips important now?
The race to increase the manufacturing process of computer chips deals with finished goods and the fulfilment of consumerism, and it is inversely related to the sale of commodities.
In other words, it is an intermediate product, and without it, the whole image of the finished product is not a feasible option. In simple terms: “No Chips, No finished product.”
Because of the lack of manufacturing companies in and around the world, a minor delay in the production of chips leads to further delay in the production of a major commodity like an iPhone or software, a customized laptop having a capacity of running more programs and so forth.
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A negative multiplier effect becomes apparent because of this scenario. The correct word for this is- Shortage.
There is a shortage of chips in the world, which is why it is becoming a hot topic on a political level. The rate at which chips are being manufactured doesn’t meet the rate at which technology and digital products are being purchased, resulting in delays in production, assembly lines, etc. It is an urgent requirement for a growing need for technological devices to satisfy the ideal of consumerism.
Which Countries are coping up with the current shortage of chips?
When it comes to the trade war, there is no doubt that it is between China and America, and when it comes to coping with the current shortage of chips, it is the same.
China has been investing a lot in the manufacturing of chips. Still, it will take a lot of time to reach a stage where it could dominate the world market or become a strong competitor mainly because of the sanctions laid by the former American President, Donald Trump, and its continuation by his successor President Joe Biden.
The allegations against Huawei, China’s most giant chip manufacturing company, have affected the prospect of manufacturing and creating a supply chain. It made some countries raise their eyebrows and be a little cautious before making any deal.
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As long as the issue is not resolved, it would be difficult for China to see its investment profit. However, China’s tax break and subsidies to its chip manufacturers will have a positive multiplier effect on other areas like Quantum Physics, where China is currently dominating.
On the other hand, the U.S. is doing the same by offering chip manufacturers ample tax cuts and subsidies and trying to meet the shortage. The U.S. is essentially trying to increase the manufacturing capacity and to supply it within the country to help the companies relying on chips resume their production and satisfy the demand of the market.
Let it be apparent that Intel is the biggest company and a pioneer when it comes to chips or semiconductors. Still, the capacity it produces doesn’t fulfil the market requirement or covers the gap created by the shortage.
The tax relief and other subsidies have managed to positively affect the users as Intel is currently in a position to expand its manufacturing line and is gearing up to meet the requirement.
In addition, Congress is busy discussing a bill for “Chips for America,” which will help the U.S. rely less on other countries and focus on its domestic manufacturing capacity.
Why does the U.S rely on Chips from other countries?
It is very simple. The Asian countries do not have many regulations concerning the production of chips, and it has the workforce required to make such chips, so it becomes a reliable source of supply.
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There is also an apparent reason for the outsourcing of chips- cost-effective. By outsourcing the manufacturing to economies like Taiwan, the U.S companies like Apple can cut the additional expenses which they will have required to incur. Still, because of the exchange rate of Asian economies, U.S companies get an opportunity to optimize the cost.
Taiwan, the country producing the most number of chips, is harmless when observed, but because of the existing shortage, it must be discussed, and the nations at stake must pass resolutions to meet the global shortage.
But it would not be wise to consider that China will dominate the chip market in years to come because of its reputation on surveillance and other activities where it is an accomplice.
The U.S is just trying to retaliate against China in attempting to increase domestic production, and it will succeed too. Still, it is purely at the discretion of companies involved in the production of finished goods. If they don’t deal with domestic chip manufacturers even after tax breaks and continue outsourcing the supply chain, then a chaotic impact may become apparent.
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In the complicated century where ideologies are fading, it would be wiser for emerging or already emerged economies to start boosting their own manufacturing capacity of chips in their own way to meet the global shortage. A reliance on massive economies would extend the deficit further as the citizens of these economies will remain consumers and at the mercy of the chip-dominating countries.
Therefore, the final takeaway would be to negotiate the process of starting a manufacturing unit in countries other than those mentioned above. India could be an option in Asia, and like that, different continents or countries should look for themselves too to be on the safe side while two giant economies collide.