One of the biggest issues to emerge from the COVID-19 pandemic was the semiconductor shortage. The production of these chips was slowed during the pandemic, but demand for consumer goods that use these chips skyrocketed.
These chips are used in devices such as smartphones, computers, home appliances, and automobiles. The supply of semiconductors is still a major issue, and now there is a global chip war as America and China look to dominate the lucrative market.
What is the Global Chip War?
So, what exactly is the global chip war? Semiconductors from RS Americas and other companies are such an important part of modern-day life and are used in many different types of products, but there is more to it than this. These chips are critical to military hardware and AI systems, so geopolitical tensions are high as different countries attempt to gain the upper hand. Most notably, the US and China are battling one another, with the US attempting to impose restrictions on the exportation of chips to China and Chinese companies due to national security concerns.
The Past & Present State of the Semiconductors Market
Turbulence in the semiconductors market has demonstrated why this is such a critical market that can have a huge influence on the economy, international relations, and tech development.
Semiconductor companies purposely slowed the production of chips at the start of the pandemic, anticipating a sharp drop in demand, but with consumers stuck at home, demand went through the roof for products like games consoles and smartphones. This created widespread shortages around the globe and impacted many different economies and industries.
The balance has improved in recent times, but there is still great instability. Many companies started to stockpile chips to build up inventories during the shortage, but now, many companies have an oversupply of chips as the economy has slowed down. To reduce supply, the biggest chip firms have once again slowed production.
What Can We Expect from the Future?
It is hard to predict what will happen in the coming months and years in the semiconductor market as there are so many factors at play. As economic conditions begin to improve around the world, it is hoped that there will be a healthier balance between supply and demand.
In terms of the global chip war, tensions are likely to remain high. It is likely that nations will look to diversify their supply chains so that they are not reliant on a single source. There will also be a race to improve the technology as a way to gain the upper hand, especially when it comes to areas like AI and 5G.
The global chip war and continued disruption in the semiconductor market are major issues around the globe right now. Not only is this impacting the product of many popular consumer goods, but it is also contributing to geopolitical tensions that show no sign of easing.
