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McAllen, TX 78501

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1200 Ash Avenue
McAllen, TX 78501

(T) 956-682-2871
(F) 956-687-2917

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1200 Ash Avenue
McAllen, TX 78501

(T) 956-682-2871
(F) 956-687-2917

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1200 Ash Avenue
McAllen, TX 78501

(T) 956-682-2871
(F) 956-687-2917

The McAllen Chamber of Commerce helps local businesses thrive by creating economic momentum, accelerating connections and enhancing the quality of life in the region.

1200 Ash Avenue
McAllen, TX 78501

(T) 956-682-2871
(F) 956-687-2917

Newsroom

Opportunities During the Chip Shortage


Underlying vulnerabilities in the global supply chain became apparent in the recent chip shortage. Chips are the indispensable core product for autos, personal electronics, and home appliances. Because of the shortage and delays in the supply chain, the auto industry could experience a $61 billion loss in revenue.

 

The problem has escalated to the point where governments are getting involved to help alleviate short-term bottlenecks and to develop policies that protect the stability of the semiconductor supply chain in order to avoid disruptions over the long run. 

The United States is the global leader in chip design, with American companies accounting for 47% of global chip sales in 2019. America has the edge because we still attract top talent from around the world to design chips, and also because American companies invest over 16.5% of their R&D spending on semiconductors. 

The key challenge comes from the fact that the United States may be the leader in chip design, but almost all the manufacturing takes place in East Asia (Taiwan and South Korea). To build a fabrication facility for semiconducting chips takes anywhere from 24 to 42 months and can cost between $1.7 billion to $5.4 billion to construct, depending on the type of chips manufactured.  To make things worse, there was a combination of natural disasters and fabrication incidents that made the shortage even worse. This problem cannot be fixed overnight.

Here are several key trends:

  1. Over the next ten years, countries will incentivize the “reshoring” of the semiconductor supply chain to protect their country’s industries.
  2. China will continue to invest heavily in fabrication and design. The Chinese recognize this is a critical long-term investment for their tech industry.
  3. The United States will continue to be the leader in chip design and will gain shares in manufacturing after 2020 issues are resolved. This will be a growth opportunity for communities that want to diversify their manufacturing base.
  4. Europe will recommit to semiconductor manufacturing to increase production to 20% of the world’s chip supply.
  5. More and more semiconductor companies will move away from “contract manufacturing” chips towards a fully integrated model. They will design, build, and sell chips.
  6. There will be a substantial investment in design and fabrication to take advantage of the surging chip demand.
  7. Artificial Intelligence, 5G, the Internet of Things, and driverless vehicles will lead to a massive demand for chips. The winners will be the communities and companies that make investments and pursue innovation.

With every crisis or challenge, comes opportunities. It just depends on how you view the world.

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