BLOG: The new oil shocks: semiconductor supply shortages threaten the global economy

Author: ICIS Editorial

2021/02/03

LONDON (ICIS)--Click here to see the latest blog post on Asian Chemical Connections. The oil supply shocks of the 1970s are at risk of being replaced by the semiconductor supply shocks of the 2020s. There are just three global suppliers of high-value semiconductors that might soon become two, down from 25 in 2000. Eighty percent of all types of semiconductor production is located in northeast Asia. This is the result of financial and stock market incentives that have led to a short-term approach among companies, and lack of Western government support for semiconductor producers. A shortage of high-end chips could undermine innovation and weaken the fight against climate change. Overall semiconductor supply shocks - on a scale much greater scale than the one affecting the autos industry today - could bring the global economy to a virtual halt. Semiconductors are vital raw materials in autos, consumer electronics and white goods etc. These are also key end-use markets for petrochemicals. Petrochemical producers must build contingency plans for disruptions to markets resulting from this very fragile semiconductor supply chain.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.