The worldwide semiconductor shortage, which is also affecting Portugal, is the result of a combination of factors, said Luza, partner at consultancy BCG Jose Ferreira, who believes prices will rise in the short term.
The lack of semiconductors has already led to a halt in production. at Bosch, in Braga, or Lear Corporation, in Walesa, just to give a few examples, as there are several businesses in the areas of Braga and Viana do Castelo that suffer from this condition.
Semiconductors cover a very wide range of things, from a small sensor in a car that beeps to a processor that sits inside a “smartphone,” among other things.
The global semiconductor supply chain is essentially divided into two parts: the states and Europe are “where most of the R&D, circuit design and all of the design component is done,” and manufacturing – because it is a business scale – is concentrated in China (low and medium difficulty), South Korea and, in particular, Taiwan, where the most advanced “chips” are located, explained the head of the Boston Consulting Group (BCG).
“Taiwan has an important feature” in that it has TSMC – Taiwan Semiconductor Manufacturing Company, which “is recognized as a company that is 10 years ahead in technological terms compared to any semiconductor manufacturer,” he added.
In this aspect, there is a “geopolitical problem from the point of view of semiconductors,” as China has a “vision of a ‘one China’ of which Taiwan is a part,” he continued. This means that if Beijing invades Taiwan – “although it is unlikely, it is possible” – the United States “will be geographically held hostage by a superpower in an absolutely critical zone.”
Taiwan is responsible for 92% of modern semiconductors, while South Korea is responsible for another 8%.
In terms of semiconductor demand, Jose Ferreira said the covid-19 pandemic was one of the factors that led to the shortage, with increased purchases of laptops, consoles, smart home devices, among others.
Another factor was bitcoins (cryptocurrencies). “You need processors to mine bitcoin, and this assumption has created a huge demand for processors,” he continued.
And so “the chips that were used in electric cars, game consoles, computers have started to be assembled to” mine bitcoins, “and this puts pressure on the supply chain,” he said.
In fact, the pressure is such that some semiconductor console manufacturers have imposed restrictions on their “chips” to prevent their use in other operations, he said.
The third factor, José Ferreira added, “has to do with structural demand that is growing” driven by smart cities. [cidades inteligentes], Internet of Things [Internet das Coisas], electric vehicles, etc.
Finally, demand for semiconductors was also influenced by “a purely logistical factor: the supply chain is under pressure due to tariff issues, and maritime transport is in trouble due to covid-19.”
In the short term, “price increases will increase, cars or ‘smartphones’ will become more expensive,” he says, assuming that the price effect due to the imbalance between supply and demand “is likely to be absorbed by the consumer.”
And with the advent of the fifth generation (5G), the pressure on demand will continue.
However, Jose Ferreira hopes that these demand pressures can ease, namely because “the bitcoin effect is more temporary”, sea transport is normalizing, and also because of the recovery of semiconductor production capacity.
On the other hand, the United States has created an incentive program – $ 50 billion – to attract the chip industry.
“Due to geopolitical problems, the United States, in particular, and Europe is likely to follow them, are trying to introduce production facilities on their territory,” he stressed.
“We are seeing a deficit that combines several factors at once, but I think that they will be eliminated naturally,” he concluded.
