The global shortage of chips is having a huge impact on businesses, and chipmakers are working hard to address the shortage.
One of them is by increasing its chip production capacity. Until 2021 ends, it is estimated that chipmakers will spend up to USD 146 billion.
This estimate is stated by Gartner in its report, which states that this investment is 50% higher than the capex (capital expenditures) of chip-making companies before the pandemic. Even compared to investment in 2016, this figure is twice as big.
According to a Wall Street Journal report, the shortage of chips and market demand for electronic products that continues to increase has made spending on semiconductors soar in many regions, including the United States.
Chipmakers are currently increasing their production capacity in China, Taiwan and South Korea. But they are also looking for ways to maintain component supply by building factories in countries such as Japan, the US and the European Union.
For now, 80% of that investment is still focused on increasing production capacity in Asia, and only 14% of that global investment will be in the US. This ratio, according to Gartner, will last until 2025.
Although some manufacturers have already started building factories in the US, analysts expect there will be only a 6% increase in chip production in the US. That's why the Chamber of Commerce asked Congress to sign a law that allows subsidies worth USD 52 billion for companies that build chip factories in the US.
The only thing to remember is that the cost of producing chips in the US is much higher than the cost of producing in Asia, which means that the US government must provide more incentives to attract chip manufacturers to want to build factories in the US.
On the other hand, China, for example, is also boosting their local semiconductor industry. South Korea is also targeting a doubling of their chip exports to $200 billion by the end of the decade, by offering big tax breaks and other subsidies, including the promise of water supply -- which is much needed in the chip production process.
