Hundreds of billions will be spent by governments and corporations in coming years on a 'chip race' with geopolitical as well as economic implications. The stay-at-home era caused by Covid-19 pushed demand beyond levels projected by chipmakers. Lockdowns spurred growth in sales of laptops to its highest in a decade. There is worldwide dependence on two Asian powerhouses -- Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. -- a reliance exacerbated by the pandemic and rising U.S.-China tensions even before the current deficit.



Home-networking gears, webcams and monitors were snapped up as office work moved out of the office, and Chromebooks as school left school. Sales also jumped for home appliances from TVs to air purifiers, all of which now come with customized chips. PC makers began warning about tight supply of semiconductors early in 2020. Then by mid-year, Huawei Technologies Co. -- a major smartphone and networking gear maker -- began hoarding components to ensure its survival from U.S. sanctions that threatened to cut it off from its primary suppliers. Other Chinese companies followed suit, and the country’s imports of chips climbed to almost 380 billion dollars in 2020 -- making up almost a fifth of the country’s overall imports for the year. Chip shortages are expected to wipe out 61 billion dollars of sales for automakers alone this year and delay the production of a million vehicles in the March quarter. Not only cars but possibly a broad spectrum of chip-heavy products from phones to gaming consoles could see shortages or price hikes. With all this we are expecting a “serious imbalance' to pose a problem to the chip business this year.


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