During the pandemic, a severe shortage of semiconductors—80 percent of which are manufactured in Taiwan and China—emerged, shining a spotlight on a vulnerability in global supply chains. In interviews at the World Economic Forum this week, Intel CEO Pat Gelsinger noted that semiconductors will replace oil as the commodity that will be geopolitically crucial in the coming decades.
“While oil reserves have shaped geopolitics over the past five decades, the location of semiconductor manufacturing supply chains will shape geopolitics over the next five,” Intel’s Pat Gelsinger noted in interviews with both Fox Business and CNN.
Increased Resilience
Gelsinger emphasized that the U.S. and Europe account for only 20 percent of global semiconductor production today, while Asia accounts for 80 percent—a ratio that he believes must be balanced to make global supply chains sufficiently resilient.
– If we’ve learned one thing from the COVID-19 crisis, it’s that we need greater resilience in our supply chains and a level playing field so that sound investment decisions can be made.
Against this backdrop, Intel has decided to invest $20 billion in two semiconductor factories in Ohio and Arizona in the United States and to make additional investments of up to $90 billion in new European factories. During the pandemic The semiconductor shortage hampered the production of computers, cell phones, cars, defense equipment, and many other vital electronic products, leading, among other things, to production stoppages at car factories and to higher prices that fueled inflation.
National Security Issue
In the United States, the risk of a semiconductor shortage is viewed as a national security issue, which has led the government to launch a program aimed at boosting domestic semiconductor production. President Biden has repeatedly stated that the U.S. will become the world leader in semiconductor production, and his administration has taken steps to restrict China’s access to semiconductor manufacturing technology. In August, the new ”CHIPS and Science Act” was passed, while a staggering $200 billion was earmarked to strengthen the U.S. semiconductor industry. The EU has also adopted the European Chips Act (ECA) and launched the ”Chips for Europe” investment plan to increase European semiconductor manufacturing and thereby reduce Europe’s exposure to supply chain risks.
