What do COVID, a drought in Taiwan and China-US tensions have in common?
It’s an international phenomenon wreaking havoc on vehicle and computer production lines, and potentially holding up our access to new cars and electronics by months.
Hold up, what’s chipageddon?
Chipageddon is what some have dubbed the global shortage in computer chips that has hit over the last year.
It started as demand for consumer electronics surged when lockdowns hit and the world found itself working and learning from home.
“In the past every household maybe just had one PC. Now that’s increased to three, four, five PCs per home, so that’s created a very serious demand,” says microchip analyst Sebastian Hou from CLSA in Hong Kong.
Add to that the demand for the games consoles and phones keeping us entertained, and all of a sudden the microchip manufacturers had huge orders they couldn’t keep up with.
Put into the mix factories being shut down in Asia where most of the chip factories are based, hold ups at ports, and the chips we need to power thousands of products we rely on became even more scarce.
Combine that with China holding back some of the chips it usually exports to America, after former US president Donald Trump started restricting two-way trade.
It’s a perfect storm.
What are chips in again?
So many things that we use every day.
Annette Dowd, physicist at the University of Technology Sydney, said it’s unlikely you could go into a room in your home without finding a chip somewhere.
“They are in all our home appliances, our monitors, our screens and of course our cars.”
Cars are a big one. The modern car can have over one hundred chips in it. Think power windows, brakes, GPS, sound-system LCD display.
Production lines have shut down in the United States, Mexico and Europe for companies including Ford, Volkswagen, Nissan, Toyota and General Motors.
French car manufacturer Peugeot has even resorted to replaced digital speedometers with old analogue ones in one of its models.
US president Joe Biden is so worried about this he convened a special chip shortage summit this month with heads of big tech firms to try to boost domestic production of the semi-conductors.
He’s looking at contributing $US50 billion to build up America’s capacity.
So what’s the effect for me?
Australians are already facing longer wait times for new cars and consumer electronics.
The Motor Trades Association of Australia (MTAA) told the ABC in March the wait time for buying new cars has blown out to longer than six months for some models.
It’s also prolonging waits for services, as parts deliveries from overseas are held up.
Apple had to delay the release of its new iPhone because it couldn’t get the chips from its supplier in China.
In February, JB Hi-Fi boss Richard Murray warned shoppers to expect stock shortages for the foreseeable future.
He said shipments of TVs was a particular problem, and would get worse around now as television manufacturers push out their new models, which they may be waiting for parts for.
JB HiFi declined to give an update on the situation when contacted by the ABC.
In short, if it’s got a chip in it, there is a possibility it could be held up.
You mentioned a drought in Taiwan? What’s going on there?
Taiwan produces around 60 to 70 percent of the world’s semi-conductor chips, and 90 percent of the most advanced ones.
Making computer chips is incredibly water intensive — a single chip-laden silicone wafer needs about 8,000 litres of water to produce, because after every one of the 100 or so steps in chip manufacturing, they need to be thoroughly cleaned.
Taiwan is usually a pretty wet place — like northern Australia, it has a monsoon season each year that usually brings on average three typhoons — the northern Pacific equivalent of cyclones.
These extreme weather systems have traditionally provided a reliable source of water to the country.
But in 2020, not a single system made landfall.
When you live in a place that gets lots of rainfall, water management rates pretty low on the list of priorities. When that rainfall doesn’t eventuate, you can very quickly run into problems.
Taiwan is now in the grip of its worst drought in 56 years — water storages are at record lows.
Some at less than 155 litres, and that has led to drastic efforts to conserve the resource.
Farms have borne the brunt of the restrictions, but water-intensive microchip manufacture has also taken a hit, with companies required to limit production.
Sebastian Hou worries that “this could become a very serious problem if we are not getting enough rain further in May and June — because usually that is rainy season here.”
At the moment, it looks like Taiwan is in for an average monsoon season but even this may not be enough to completely make up for the current shortages.
So now climate change is affecting my new TV?
All of our weather is happening in the context of a changed climate, particularly the extremes.
Research indicates that the Taiwanese monsoon will see significant changes in a warmed world, but intriguingly it will be both wetter and drier at times.
The region will likely see far more variability – more regular droughts and periods of devastating flooding – climate change seems set to alter the distribution of the water that the wet season brings, meaning that the once-regular rains will become a lot harder to rely on.
And we are still learning about other areas and industries that will be challenged by our changing climate.
Entire industries and economies will have to make major reforms in order to smooth out some of that uncertainty and buffer themselves against the climate change.
How long will ‘chipageddon’ last?
The head of the networking giant Cisco, Chuck Robbins, told the BBC he expects the microchip shortage to last for most of this year.
“We think we’ve got another six months to get through the short term,” he said. “The providers are building out more capacity. And that’ll get better and better over the next 12 to 18 months.”
Annette Dowd of the University of Sydney says we could be looking at “a few years of slowdown,” even though Asian chip manufacturers are investing in boosting capacity, and the US wants to set up its own factories.
“You have to make exceedingly complex manufacturing lines,” she said.
“One particular production line can’t easily be changed to manufacture a different type of chip, so even if a new production line, and new factory is being built it still takes several years.”