Messy dream of american chips

A global shortage of computer chips has halted the production of cars, computers, and even dog washing machines. But now there are signs that the shortage of chips — the tiny parts that function as the brain or memory in everything electronic — is ending.

This could be good news for our budgets. It’s also an awkward moment for the Biden administration and US lawmakers, who are pushing for taxpayers to fund computer chips for a variety of purposes, including deficit reduction.

Some of these goals are reasonable. But throwing public money around to fix the chip shortage seemed doubtful. Now this looks like a bug. Let’s talk about why:

Why are chips important again?

Computer chips are essential for smartphones, game consoles, and other consumer electronics. We also use them in fighter jets; in ignition, braking and entertainment systems of cars; and track the milk yield of dairy cows.

As my colleague Don Clark said explained Last year, there is nothing strange in the fact that the chips temporarily became a shortage. What has been unusual in the last couple of years is the wild combination of pandemic-related disruptions and our overwhelming desire to buy more stuff, which has led to various shortages.

What changed?

In recent weeks, computer chips have suddenly become abundant. Several computer chip companies warned that their sales transition from hot to cold. Unused chips accumulates in South Korealarge manufacturing center, the fastest pace in recent years.

The main reason is that people all over the world do not buy electronics such as laptops, smartphones and TVs. as much as they were a year or two ago. Many people are concerned climbing prices as well as the health of the economy and are restrained. So companies are cutting back on orders for computer chips that could be used in many products.

This is how economics and computer chips work. When people are feeling good and spending a lot, chip factories ramp up production to make a lot more. Almost always they overproduce and there are too many chips. Some experts say the pandemic mania will be followed by a chip crash. We’re not there yet, but we’ll see.

What does the Biden administration have to do with it?

I’ve written before about the consensus in Washington to increase US government support for US chip factories and expertise. Congress discusses – and still arguing – features of spending more than 50 billion dollars of taxpayers’ money on this. Most of the most advanced chips in the world are made in Asia, especially Taiwan and South Korea.

One of the stated goals of the funding is to help address the chip shortage. And now? Nothing has passed, and some types of chips are running out of stock.

There are good reasons for US taxpayers to subsidize chip production. Many experts note the importance of building up knowledge about advanced chip manufacturing in America. it not good that so many major chips are made in Taiwan, in China’s potential sphere of influence. The US military wants to ensure their uninterrupted and proven supply. (There are chip factories in the US specifically designed for this.)

But the mission of the American chip plan is inconsistent. U.S. officials and industry representatives have presented a long list of benefits of U.S. chip financing, including creating more American jobs, being able to compete with China, and making life easier for U.S. businesses. e.g. car manufacturers keep making your products.

The latter, to be honest, never really made much sense. The hard truth is that cars have to compete for space on chip factory lines against more profitable chips for smartphones or other fancy equipment. Even if more computer chips were made in America, there’s no reason a chip made in Texas would be used only in the Ford F-150 and not in trucks from European or Asian companies.

The more excuses the government throws into its chip plans, the less clear it is about what America is trying to achieve.

Learn more from On Tech about computer chips:

  • Twitter sues the Indian government: Company object to orders delete some tweets and block accounts that India believes violate the laws of the country, said my colleague Karan Deep Singh. This is the latest confrontation between an American Internet company and the world’s largest democracy. above the appropriate limits of freedom of speech.

  • This may be one of the largest known personal data breaches in China. Hackers are putting up for sale a Shanghai police database that could contain information on about one billion Chinese citizens, say my colleagues John Liu and Paul Mozur. informed.

  • When a religious pilgrimage site is down: Saudi Arabia directed Westerners to the only government-authorized website to book a trip to the Islamic holy city of Mecca. Washington Post informed that technical problems prevented thousands of people from performing Hajj. (Subscription may be required.)

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