Security concerns over chip shortage are pushing governments to act - Moody’s

CNBC reports that an analyst at Moody’s said that more countries are pushing to produce their own semiconductor chips, which are in short supply globally, because “it’s a matter of national security.”

“I think the main problem really is that new supply is hard to come by and the surge in demand is not going to be abetting anytime soon,” Timothy Uy, an associate director at Moody’s Analytics, said.

“On both the supply and demand sides, I think companies are adjusting. Governments are also getting in on the action because they view this as, in some sense, kind of a matter of national security,” he added.

Semiconductor chips are ubiquitous — without them, a lot of products will not work. This is already being felt by the auto industry, where carmakers have been forced to stall production as a result of the global chip shortage. Some reports say the chip shortage may last until 2023.

Manufacturing semiconductor chips is an intricate, capital-intensive process that involves weeks of production, Uy said last week in a note. It takes even longer time to distribute them, he said.

He explained that new supply cannot be created instantly — and sometimes, it may take years for new supply to come online as factories need to be built and fitted with the proper technology.