Missing semiconductors: How the shortage of chips is affecting China

The shortage of computer chips is causing production downtime worldwide. China in particular is feeling the consequences. The trigger of the shortage is the rivalry with the USA – but also hamster purchases by Chinese companies.

China is one of the reasons for the global chip shortage. At the same time, the People’s Republic itself suffers enormously from the fact that there are too few semiconductors worldwide. One of the triggers was the announcement by then US President Donald Trump.

His government threatened to impose sanctions on China to cut the country off from the global semiconductor market. This announcement alone was enough to induce Chinese companies to buy up chips on a large scale at short notice around the world.

Supply chain problems

This initially helped the Chinese tech and electronics industry. But at the same time, the move has completely thrown the so-called just-in-time production of large international corporations out of sync. For example in the automotive industry: today it is no longer possible to build cars without special chips, especially no e-cars with their particularly complex control electronics.

Not only the conflict between China and the USA is to blame for the global shortage of computer chips. The corona-related supply chain problems are also affecting the semiconductor industry. In addition, a major fire in a chip factory in Japan and the shortage of water in Taiwan in the spring meant that some important chip producers were unable to manufacture.

USA increase the pressure

The ASML case shows how much geopolitics is now playing a role in the global computer chip crisis. The Dutch company builds special machines for the high-tech computer chip industry. Under pressure from the US government, ASML no longer supplies Chinese companies, at least not with the best and most modern machines for chip production.

This makes it more difficult for China’s semiconductor industry to become completely independent from the rest of the world. However, the state and party leadership is sticking to the goal of so-called chip self-sufficiency: They want to make China independent of manufacturers from other parts of the world in the medium to long term. Not only would the domestic electronics and auto industries benefit from this, but also the Chinese military.