What Happens When The Chips Are Down
It is highly unlikely anyone will feel real nostalgia for the year 2020, soon or ever. But recall the commercials you saw on TV around this time three years ago. With somber music playing in the background, they usually went something like this: “In these uncertain times…buy a Kia Telluride.”
At the height of the Covid-19 pandemic, that’s exactly what happened. People bought cars. And VR headsets. And PlayStations. And Peloton bikes. And soon enough, semiconductors — the tiny, typically silicon-based chips that are crucial to all of those things and almost anything else with an on/off switch — became a scarce commodity.
Despite some recovery, we’re still feeling the effects of the now-infamous “chip shortage,” even as governments and industries worldwide conjure innovative, multibillion-dollar efforts to ensure this doesn’t happen again. Last year, President Biden signed into law the CHIPS and Science Act of 2022. It’s an unprecedented $280 billion effort to bolster America’s local chip-making ecosystem and effectively create one that’s ready for a new age.
But that’s a very tall order. After decades of America’s outsourcing to other countries, U.S. chip production infrastructure is woefully ill-equipped to produce the advanced, bleeding-edge semiconductors needed for the consumer devices of the future, like electric and connected cars.
“In 2021, auto prices drove one-third of all inflation, primarily because we didn’t have enough chips to keep putting cars on the road,” Michael Schmidt, the CHIPS program office director, told Huge Moves in an email. “Medical device manufacturers have had trouble procuring the chips they need for pacemakers, heart monitors and other devices that keep Americans alive.”
Fast-forward to today, and the question of where and how a nation can procure chips is a national security issue. Many seeking solutions are looking to the automotive industry for innovative answers — because cars have emerged as a kind of poster child for the semiconductor crisis, and the path to an electric recovery.
