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Technology industry could be wiped out by the 'chipagedon'

On the other side, you can feel the flapping wings of a butterfly.

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Technology industry could be wiped out by the 'chipagedon'

On the other side, you can feel the flapping wings of a butterfly. The Chinese proverb "Flattening a butterfly's wings" is being realized in 2021. Aftershocks from the earthquake are also being felt in other industries. Covid-19, cryptocurrency mining and the advancement of cloud computing ('cloud computing"), along with sales of smartphones' have all highlighted the global shortage for these components. This is a problem that has been in the first order.

Automobile industry is not the worst, but it has been the most unemployed. Due to lack of supply, several of the main factories had to close temporarily in the United States or Europe. The US saw a 4.3% drop in vehicle production in April. In Spain, the Stellantis plant (previously PSA Group in Vigo) has suspended its sine die' lines. Toyota will follow suit in Japan in part of June.

The lack of enough semiconductor supplies is now threatening the recovery of the industry that was paralysed by the pandemic last year. According to AlixPartners estimates, the fall in supply - which could not be normalized before 2023 – would result in the automotive industry losing around 110,000 million dollars annually in 2021. It would also reduce world production by 3.9million vehicles and 42,000 jobs.

A semiconductor is any material which allows the passage of electricity or prevents it. While silicon and germanium are most commonly used, the industry also uses sulfur, bore, or cadmium to make them.

The most significant application of these chips, as they are commonly known, is the manufacturing of transistors. This was a revolutionary time in electronics, particularly consumer electronics, since their invention in the late 1940s. They are used in all sorts of electronic devices, including smartphones, calculators and computers. Experts warn that they could see a rise in prices (from 1% - 3%) due to a lack of semiconductors.

Automotive industry uses 'just-in-time' processes. This is characterized by a shortage of supply to lower costs. This problem has been exacerbated by the closure of factories caused by the pandemic. The increasing weight of electric cars has increased the dependence on semiconductors.

The technology sector, which was boosted by increased demand for computers and gaming consoles in confinement, demanded chips during the months that were left. Manufacturing has not been able to meet this demand, and so began the first chapter in 'Chipagedon'. Experts have called it the atypical situation the planet is facing due to a lack of semiconductors, whose origin problem lies in Asia.

As a soccer trident South Korea, Taiwan and China score goals on the field of semiconductors. The TSMC group is the champion of chip manufacturing on the first island, an Asian island of just over 20,000,000 inhabitants. The country accounted for 22% of the world's production in 2020.

Samsung is following suit, with the South Korean company producing 21% of all semiconductors on the market in 2013. They share almost half the market, but China still remains far behind. It has risen from 0% to 15% in global manufacturing quotas over the past 30 years, surpassing even Japan. According to forecasts, he will reign supreme in the sector within nine years. Other giants, such as the Americans Intel or Qualcomm, and the Dutch ASML, are unable to keep up with the Asian pulse.

The EU has been studying the possibility of forming an alliance of European semiconductors. This would include companies such as STMicroelectronics and NXP. It also includes the manufacturer of ultra violet (EUV) technology equipment, ASML. This community roadmap outlines the process of developing a plan that will allow the various governments of the Union to finance these companies in order to at least double their current market share.

"To be leaders, not followers, the EU industry must urgently and ambitiously take action on digital technologies like semiconductors, quantum, space connectivity, batteries, and cloud," stated Thierry Breton (Internal Market Commissioner).

However, it could take up to four years to develop a factory capable of producing the 3 and 5-nanometer devices - which are almost as fine as human hairs - as well as the 15,000 million euro investment. Despite these numbers and deadlines Europe is still working on it. Europe plans to work with TSMC to construct a plant in Old Continent. Intel joined the bet separately, asking Brussels to provide about 8,000 million euro in public aid for another factory.

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