Supply Chains No More: Semiconductors

The American economy faces shortages of every conceivable product, but few widgets have captured the public imagination as much as semiconductors. Ubiquitous and powerful, these little silicon bits are what separates the modern digital world from the rest of human history. We need them. Lots of them. In everything.

Unfortunately, manufacturing semiconductors isn’t nearly as easy as flipping a few switches. Each facility costs about $10 billion in funds, at least two years in time, and necessitates a small army of specially trained labor. Even worse, as our needs change, fab facilities must be retooled. Even if that could be done overnight — and it cannot — there’s a lengthy lead time between a fab beginning work and the first new chips coming out. Months. And that’s just to get the chips our the door. You still need to get them delivered to manufacturers who will put them into the components where we’ll use them: into flash drives, wiring harnesses, phones, microwaves, household appliances, televisions, computers, and so on. The months necessary to make the chips is just the beginning–they are only a part of completely separate, complex, and global supply and assembly chains.
 
And therein lies the rub. The long delay for getting a semiconductor supply system tuned just right is just the first thing that has gone wrong in our world of globalized manufacturing.
 
Join Peter Zeihan November 19 for Supply Chains No More, the second of a three-part series of seminar exploring the challenges facing the American and global economies.

REGISTER FOR SUPPLY CHAINS NO MORE

Also in this series:
 
Part I: Wither the Workforce
November 17

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And Part III: The Face of Inflation
December 1

Please Join Us: Wither the Workforce

Peter’s back from chatting with dozens of firms across the manufacturing, finance and agricultural space and one topic kept popping up: what’s up with COVID vaccine mandates? The answer — from the business community — might surprise you!

The impact of vaccine mandates is only one of a plethora of issues impacting the American workforce. Join us Wednesday, November 17 for Wither the Workforce, a wide-ranging discussion of everything from COVID to manufacturing trends to technology to security to demographics, all from the point of view of the labor markets — with a heavy emphasis on the workforce of the United States and those of America’s partners and competitors.

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Part I: Wither the Workforce is only the first of a three-part series on the life and times of current major economic trends. Also in this series,

Part II: Supply Chains No More
Friday, November 19

REGISTER FOR SUPPLY CHAINS NO MORE
 
And coming soon, 
Part III: The Face of Inflation
Wednesday, December 1

Part II: Supply Chains No More

Anyone try to buy anything recently? Like, anything?

Throughout northern Mexico, parking lots full of finished automobiles (that are just waiting for a few semiconductors) have become common. Year-on-year prices for used cars are up 25 percent — a hands-down record. New models of televisions and consumer electronics are simply not happening this year. If you haven’t finished your Christmas shopping already, then ha! It is probably too late.

Let’s make this about me for a moment:

  • Last May a jihadist dove attacked one of my windows. I immediately ordered a replacement pane, which still hasn’t arrived.
  • I installed a heating system over the summer, but the control module that enables me to turn the heat on has now been on backorder for four months.
  • The publication of my next book, The End of the World is Just the Beginning: Mapping the Collapse of Globalization, might be delayed because of difficulty importing the materials needed to produce paper.

There are any number of factors feeding into these problems: COVID complications, labor shortages, changing regulations, whipsawing demand patterns, container shortages. One that is a bit louder are port bottlenecks.

The issue is that most of America’s product imports come via container, and ports’ abilities to handle containers simply cannot ramp up to meet demand. Not that they can’t ramp up fast enough, they cannot ramp up at all. Every port specializes in specific sort of cargo, and when they are at 100% capacity, they are at 100% capacity. California’s regulatory and efficiency issues notwithstanding, if you don’t have the infrastructure in place, you don’t have the infrastructure in place.
 
The results are not simply bottlenecks at the ports, but backlogged shipments going back onto the ships as well as snaking through the entire road-and-rail system. Each problem has generated more which have merged together into an interlocking mess of meh. Crazy thing is, even if all of this could be magically fixed, we would still be facing supply shortages until at least mid-2023.
 
Join Peter Zeihan Wednesday, November 19 for the second in a three-part series on the here, now, and soon-to-be of the American and global economies. Part II: Supply Chains No More will focus exclusively on the products shortages plaguing us all.

REGISTER FOR SUPPLY CHAINS NO MORE

Also in this series:
 
Part I: Wither the Workforce
Wednesday, November 17

REGISTER FOR WITHER THE WORKFORCE
 
And coming soon, 
Part III: The Face of Inflation
Wednesday, December 1