Left-wing thinkers have been grappling with the problems of global capitalism for decades. From Stiglitz ‘ Globalization and its discontents at Klein It changes everything, arguments have been assembled against relentless profit-seeking globalization of manufacturing and the supply chain for the sake of humanitarian, environmental and economic justice. It has served no purpose: the engine of global capitalism continues to turn for better or for worse.
But there is a growing argument to be made that a lower-cost just-in-time supply system can not only be bad for the climate or for national jobs. It can also be bad for business in many cases. the semiconductor crisis tells an exemplary story. As information technology becomes essential to everyday life in developed countries, semiconductors are essential to make the world go round. Phones, computers, game consoles, and automobiles all require increasingly sophisticated semiconductors. And most of them are made by one company: Taiwan Semiconductor. Indeed, Taiwan Semiconductor is so dominant in the field that few competitors can match them, and they are falling further behind.
Analysts say it will be difficult for other manufacturers to catch up in an industry that requires large capital investments. And TSMC can’t make enough chips to satisfy everyone, a fact that has become even clearer in the middle. a global shortage, adding to the chaos of supply bottlenecks, higher prices for consumers and workers on leave, especially in the auto industry.
The situation is similar in some ways to the world’s past dependence on Middle Eastern oil, with any instability on the island threatening to spill over into all industries. Taiwanese companies, including small manufacturers, generated around 65% of global revenue for outsourced chip manufacturing in the first quarter of this year, according to Taiwan-based semiconductor research firm TrendForce. . TSMC generated 56% of global revenue.
Being dependent on Taiwanese chips “poses a threat to the global economy,” research firm Capital Economics recently wrote.
The semiconductor shortage is hurting vehicle production lines. That’s why the next-gen gaming consoles that were supposed to be available last Christmas are still in short supply. It is also starting to have an impact on smartphones and personal computers.
There are many aspects correlated to this problem. Partly it’s a matter of national security: What does the global economy do when it relies so heavily on a single actor in a place of geopolitical instability? Part of it is a monopoly problem: is the market really free or stable if so many essential products depend on the fate of a single company? How can there be real competition if the cost of entry makes the establishment of new competition prohibitive? Partly it’s a pandemic issue: Taiwan Semiconductor and other manufacturers are struggling to meet their production targets due to the reduced capacity of COVID restrictions.
We have seen failures in the global supply chain frequently harming consumers, especially when domestic production of essential goods is phased out in favor of easily disrupted or expensive global trade. Haiti, for example, was particularly victim by destroying its domestic food production while the United States subsidized its own rice exports. the blockade of the Suez Canal speak Always green earlier this year was in part the result of larger and larger ships being forced to cross waterways that weren’t built to support them.
But the scale of the semiconductor problem raises the question of whether unregulated global capitalism is really the best way to run essential services in a global economy. Consider these staggering numbers of the same the Wall Street newspaper history:
Semiconductors have become so complex and capital intensive that once a producer falls behind, it’s hard to catch up. Businesses can spend billions of dollars and years trying, only to see the technological horizon drift further away.
A single semiconductor plant can cost up to $ 20 billion. A key manufacturing tool for advanced chip making that prints complex circuit patterns on silicon costs over $ 100 million, requiring multiple plans for delivery.
TSMC’s own expansion plans call for spending of $ 100 billion over the next three years. This represents almost a quarter of capital expenditure for the industry as a whole, according to semiconductor research firm VLSI Research.
Other countries would have to spend at least $ 30 billion a year for at least five years “to have a reasonable chance of success” to catch up with TSMC and Samsung, IC Insights, a research firm, wrote in a recent report.
This would appear to have huge national security implications, especially if an increasingly totalitarian China were to exercise more powerful control over the Taiwanese economy. The capital investment to challenge the dominance of Taiwan Semiconductor is unreasonable to ask private sector players for an uncertain return. And it would be irresponsible to just let things take their course and hope for the best.
The world has a mutual interest in distributing the production of goods such as semiconductors and it is not clear whether the private sector should be fully responsible for bearing the burden. (To say nothing of the leftist criticism that the benefits to successfully add semiconductor production should not be up to shareholders alone.)
Governments around the world have both a competitive and a cooperative interest in ensuring that resources such as semiconductors are not at the mercy of geopolitical conflicts, and that production can be scaled up as needed, even as problems had to arise in a company, a country or a corner of the world. world.
Yes, governments could subsidize national companies. But in the age of globally owned international corporations, what a “national business” means is less clear than ever, and it is a huge injustice to spend a business of taxpayers giving gifts to private businesses without return on public investment.
It sounds like radical leftism to suggest the socialization of the production of a resource like semiconductors. But it may well be that modern problems require modern post-neoliberal solutions – and that those solutions may, in the end, ironically be good for business.