China's top chip company speaks of massive silicon shortage felt around the globe

The effects of the global semiconductor drought became more apparent this week amid a rise in purchases brought on by reduced COVID-19 anxieties. The depth of the crisis was highlighted by Zhou Zixue, chairman of China's top silicon-slinger Semiconductor Manufacturing International Company (SMIC). Speaking at industry event …

[Anonymous Coward]

How very cute

“He pleaded for global collaboration and openness”

Pretty rich coming from the Chinese

[msknight]

Re: How very cute

Exactly what I was going to say. Although I'd be more specific to Xi and the government, rather than the people. Jinping has not so much blotted the Chinese copy book, more like thrown it in the ink well.

[fajensen]

Re: How very cute

He is saying that, maybe, if there wasn't a US-sanctioned trade war with China and the usual CIA-regime-change talking points flooding western media and "decision makers", then perhaps the necessary flow of Goods and Services would run a lot smoother!

The reality is that China is our main factory and it would really suck for quite a while if they went on a strike or even work-to-instructions.

[9Rune5]

"shortage of petrochemicals"

This statement took me a bit by surprise, because the oil price was low last year and has barely recouped. I suspected that perhaps because the demand for gasoline dropped, the refineries had reduced their production which in turn affected other areas.

But according to https://www.wsj.com/articles/one-week-texas-freeze-seen-triggering-monthslong-plastics-shortage-11615973401 the shortage in chemicals is due to the Texas freeze.

The February freeze that triggered mass blackouts in Texas led to chemical plant shutdowns that are disrupting global supply chains, causing a shortage of the raw materials needed for everything from medical face shields to smartphones.

Hopefully this is a short-lived shortage.

[Anonymous Coward]

Re: "shortage of petrochemicals"

"Hopefully this is a short-lived shortage."

Don't you remember the 1990s and that factory fire that caused DRAM shortages for well over a year (turned out 1 factory produced 60% of the resins used worldwide in chip packaging and it burnt down)?

Then later in the 2000s flooding in Thailand disrupted HDD production (almost all the disk manufacturers had plants beside the river that were flooded) causing a spike in prices that took a couple of years to unwind?

[Aitor 1]

Re: "shortage of petrochemicals"

Price collusion was also behind those incidents, and they got fines for it.

The lower the ammount of players, the higher the incentives to collude and fix prices.

[Alan Brown]

Re: "shortage of petrochemicals"

"That caused DRAM shortages for well over a year "

That wasn't the worst of it. It IMMEDIATELY caused vulture speculator traders to enter the ram markets and start treating it like pork belly futures.

Up until that point the major market manuplators had stayed out and manufacturers were simply turning out as much as they could to keep up with exponentially increasing demands. After that point, money market manipulators increasingly controlled semiconductor production as a way of extracting maximum "rent-seeking" profits.

The ram market was arguably set back a decade by the appearance of "Ram commodity trading"

"Then later in the 2000s flooding in Thailand disrupted HDD production"

And the same thing happened with hard drives.

it wasn't just "a couple of years" - it took EIGHT FUCKING YEARS for hard drive pricing to return to pre-2011 levels and reliability stats went out the window (5 year warranties became 12 months - and frequently impossible to actually get honoured, whilst most drives went from "rarely failing" to "unusual to see one last more than 2 years"

[DS999]

Re: "shortage of petrochemicals"

At least in the US, a lot of wells were "shut in" when the pandemic hit, because the oil price fell so far (and looked to stay low for long enough) that didn't pay to produce. Remember that point last year when the oil price went negative, and you had to pay someone $38/bbl to accept delivery of your oil?

Even producers that could produce economically at the lower price would have incentive to cut back or shut down, when they knew waiting until the pandemic was over and the world economy began to return to normal that the price would rise. You only have so much oil in the ground, why take a crappy price for it last year when you can get a much better price for it later this year?

We've seen prices begin to rise already in the last couple months in anticipation of recovery (and because of Texas) and reportedly a lot of the shut in production in the US is beginning to start back up in the next couple months as the vaccine rollout speeds up and there's light at the end of the tunnel over here.

[Alan Brown]

Re: "shortage of petrochemicals"

> At least in the US, a lot of wells were "shut in" when the pandemic hit, because the oil price fell so far

This is _really_ hard to do in the USA thanks to the Koch Brothers. if your well's producing you are legally prohibited from temporarily capping it to wait for better pricing - even if it's producing at a loss

The only way to achieve it under normal circumstances is to declare the well "closed" and then you need to put it up for sale..

It'd be interesting to know how producers managed to achieve temporrary closures (and I suspect it involves not having anyone willling to buy the product)

[Anonymous Coward]

Huawei Me?

The pandemic triggered a chip shortage because demand for electronics exploded once the quarantines and work at home started. But, after that China led by Huawei, began massive hoarding of chips taking a huge amount off the open market. Now China whines about a shortage?

Someday the world must unite to face the threat of Chinese trade aggression.

It's a war without bullets and bombs, but nonetheless: WAR!

[Duncan Macdonald]

Please show your evidence

As Huawei has had a significant reduction in its sales due to the US driven trade war limiting its supplies, please show the evidence that they are hoarding. (And Breitbart/Parler/The Gateway Pundit/etc do not count as evidence.)

[Alan Brown]

Re: Please show your evidence

It's the same evidence that China scaling bac soybean purchases was "trade warfare", despite the factor that the chinese pig flock was facing a swine flu zoonitic that resulted in ~30% of the entire chinese pig population being culled and millions of chinese farmers going out of business

You don't buy animal feed for animals which no longer exist, but the USA was trying to force China to buy its soybeans anyway

[Securitymoose]

Good news

There are more than enough cars around already. Any reduction in numbers of those planet killing electric monstrosities has to be good.

https://www.theguardian.com/news/2020/dec/08/the-curse-of-white-oil-electric-vehicles-dirty-secret-lithium

Breathe deeply, my friends, because tomorrow we choke.

[Alan Brown]

Re: Good news

lithium? The item which if the price doubles can be economically extracted from Sea water?

Someone's been smoking polyurethane

[Duncan Macdonald]

Re: Good news

The biggest problem with lithium batteries is cobalt - needed for the high performance batteries. (LiFePO4 batteries do not need cobalt but have a much lower power density - resulting in even heavier battery packs for vehicles.)

[RLWatkins]

I can't help but laugh...

... at the phrase "silicon shortage". I know what they're saying, sure, but still, silicon is something like the third most common element in the Earth's crust.