How Fragile is the Semi Supply Chain? Many Questions.

[Arthur Hanson]

With the semi-industry ever more critical to the world's economy and well-being, what are the largest threats to the semi-supply chain as far as materials, equipment, and talent? With the semi sector literally entwined with a larger and larger portion of literally everything we touch or interface with, the durability and flexibility of the semi industry are becoming more critical by the day. Everything is now deeply involved in this from materials, equipment, facilities, talent, and more than ever politics. What steps are companies and countries taking to mitigate this risk and is it even possible? With the increasing penetration of semis in literally everything, what steps are being taken, or is a collapse of the system probable based on a few key links being broken. Any thoughts and comments on this would be appreciated. What steps is the semi industry currently undertaking to keep this ever more fragile ecosystem functional? Thanks

 

[tooLongInEDA]

But just how critical is all this to the "world's economy" ? As far as I can see, the majority of semiconductor spending is discretionary and the temporary inability to purchase a new mobile phone, laptop or car is hardly a showstopper for most of us (it's not like there's any shortage of existing supply around here - or that there's any urgent need to "upgrade" what we have right now). It's obviously less good for our planned obsolescence based production systems. But so what ? The money can always be spent on something else instead. Don't like to argue against our own industry, but it does feel like we do produce a lot of "optional stuff".

What is the alternative to a globally interconnected supply chain ? Presumably there's a strong incentive for everyone directly involved (including China, perhaps excluding Russia) not to destabilise it.

We should understand fairly well by now from network theory how to build in robustness and tradeoff things like inventory, redundancy and spare capacity (though in the case of the UK health service this is certainly not understood at all and it seems to be assumed that the system runs most efficiently when there is no spare capacity - it doesn't work for roads either).

 

[soAsian]

With the semi-industry ever more critical to the world's economy and well-being, what are the largest threats to the semi-supply chain as far as materials, equipment, and talent? With the semi sector literally entwined with a larger and larger portion of literally everything we touch or interface with, the durability and flexibility of the semi industry are becoming more critical by the day. Everything is now deeply involved in this from materials, equipment, facilities, talent, and more than ever politics. What steps are companies and countries taking to mitigate this risk and is it even possible? With the increasing penetration of semis in literally everything, what steps are being taken, or is a collapse of the system probable based on a few key links being broken. Any thoughts and comments on this would be appreciated. What steps is the semi industry currently undertaking to keep this ever more fragile ecosystem functional? Thanks

Chip decoupling risks costly failure, TSMC founder warns APEC

Taiwan envoy Morris Chang calls for free trade in civilian semiconductors

asia.nikkei.com

"What may happen is that after hundreds of billions and many years have been spent, the result will still be a not-quite-self-sufficient and a high-cost supply chain," Chang said.

 

[benb]

We should understand fairly well by now from network theory how to build in robustness and tradeoff things like inventory, redundancy and spare capacity (though in the case of the UK health service this is certainly not understood at all and it seems to be assumed that the system runs most efficiently when there is no spare capacity - it doesn't work for roads either).

Supply chain is something a finance officer manages by cutting costs 2% every year. It’s about inventory turns; reduce the price 2%, and that creates a price that’s slightly lower than your competitor, which allows you to move your inventory slightly faster, which permits you to earn slightly more, which compounds and compounds, which turns a flywheel faster and faster until you are Amazon.

So you have this amazing system that makes you rich on the one hand, and you have common sense, pragmatism, and self-sufficiency, on the other. With enough plays, the common sense system will win because the other system collapses, eventually, but up to that point, it dominates.