The crisis began to emerge around December 2020. At that time, some chip foundry companies, such as Samsung and TSMC, didn’t have mature 5nm chip foundry skills, resulting in unqualified chips being put in electronic equipment produced by Huawei, Qualcomm, Apple and other companies (It is said that the performance of these 5nm chips far exceeds that of 7nm chips, but it was later discovered that there may be abnormal heating and leakage). However, these reported “unqualified” 5nm chips have not been observed negatively impacted after being incorporated into mobile phones, so the prelude to this semiconductor crisis has not attracted widespread attention. However, with the outbreak of the COVID-19 epidemic and the influence of the decree issued by the United States to crack down on global chip production and supply, the global chip supply chain has fallen into a new round of greater crisis. In March 2021, COVID-19 was initially brought under control, and countries began to resume work and production. At this time, the demand for chips from manufacturers of electronic products and smart products rose sharply. Unfortunately, those manufacturers did not understand that due to the impact of the virus, major foundries have also shut down a lot of wafer fabs. The chips that were received in the past were all foundries with wafers in stock. Wafers have long been in a state of tension, unable to meet the needs of the company’s orders one by one. At the same time, due to the limited capacity of the foundry, even if there were enough wafers, it was impossible to produce the chips needed by various companies in a short time. Besides, the decree promulgated by the United States at that time made chip production companies in countries and regions including China restricted by technology and unable to supply chips of the same scale as before.This once again caused the gap between global chip supply and demand to widen.

The significance of semiconductor chips to the military, technology and economy of each country is obvious. Patrick Penfield, a professor of supply chain practice at Syracuse University in Syracuse, NY, USA , said: “You are foolish if you do not do some of this manufacturing in your own country.” In terms of how to change the situation of this supply crisis at the national level, Robert Handfield, a professor of operations and supply chain management at North Carolina State University in Raleigh, NC, USA, said: “You cannot just step on the gas and expect the supply chain to get back up.” He also thinks that the idea that the United States or other countries can become self-sufficient in microchip manufacturing in the near future is “nonsense”, but some measures to protect against supply shocks are feasible. For instance, individual countries could increase their output of these less powerful semi- conductors and smaller, less expensive fabs might allow countries to meet their needs for chips that are critical for defense and other key sectors of the economy. Moreover, “putting more functionality in software and using more general-purpose parts for which there are substitutes” is beneficial as well.

By Tao Cheng