Bloomberg Businessweek - USA (2021-03-08

E C O N O M I C S

44

● Taiwan and South Korea have amassed

an uncomfortable degree of market power

32

Edited by

Cristina Lindblad

There’s nothing like a supply shock to illuminate the

tectonic shifts in an industry, laying bare the accu-

mulations of market power that have accrued over

years of incremental change. That’s what’s hap-

pened in the $400 billion semiconductor industry,

where a shortage of certain kinds of chips is shin-

ing a light on the dominance of South Korean and

Taiwanese companies.

Demand for microprocessors was already run-

ning hot before the pandemic hit, fueled by the

advent of a host of new applications, including 5G,

self-driving vehicles, artificial intelligence, and the

internet of things. Then came the lockdowns and a

global scramble for computer displays, laptops, and

other work-from-home gear.

Now a resulting chip shortage is forcing car-

makers such as Daimler, General Motors, and Ford

Motor to dial back production and threatens to wipe

out $61 billion in auto industry revenue in 2021,

according to estimates by Alix Partners. In Germany, DATA: BOSTON CONSULTING GROUP, SEMICONDUCTOR INDUSTRY

ASSOCIATION

Bloomberg Businessweek March 8, 2021

The Geopolitics

Of Chips

1990 2020

Share of global semiconductor manufacturing capacity

100%

50

0

South

Korea

Japan

China

U.S.

Europe

Other

Taiwan

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