Chips are becoming the "new oil" of the world economy

According to the Spanish newspaper El Economista, chips are becoming the "new oil", a scarce resource that is controlled by a few countries and regions (all in Asia). The global shortage of semiconductors is plaguing the automotive industry and the production of other technology-intensive products.

Data released in 2019 by the Observatory on Economic Complexity, an online platform for visualizing U.S. trade data, showed that nearly 50% of the total global exports of integrated circuits and semiconductor components used in mobile phones, auto parts, medical diagnostic equipment, etc. came from Taiwan, South Korea and Singapore.

Integrated circuits have become essential to today's world, and their importance will continue to grow in the short and medium term. Currently, the countries and regions that are leading in microchip production are unable to meet the growing demand, which is causing bottlenecks in the global supply chain.

Stephen Foreman, an industrial expert at Oxford Economics, said: "The global shortage of semiconductor components used in the manufacture of automotive parts has forced major automakers to cut car production. This is a clear warning signal. Although the risk of global supply chain disruptions has been greatly alleviated, it has not been completely eliminated."

The expert predicts that most of the impact of supply chain disruptions will be felt in the first few months of 2021. During this period, global production of small cars is estimated to fall by 1 million units, and some secondary effects may also appear in the second quarter. But Foreman said: "We also foresee that chip and auto parts manufacturers will regain lost ground once the impact of supply chain disruptions subsides." These days, it seems that all products contain integrated circuits.

The report pointed out that since the production of some semiconductor components mainly depends on the two Asian economies of Taiwan and South Korea, the structural changes in the demand for semiconductor components have become one of the focuses of global finance. In terms of certain types of integrated circuit products, this situation is even more extreme, and a heavy dependence on Taiwan and South Korea has been formed.

"Taiwan and South Korea have a similar influence on the chip industry to OPEC's influence on the oil industry," said Rory Green and Steven Blitz, economists at Lombard Consulting, a reliable source in the UK.

"The accelerated development of the Internet of Things has made semiconductor components more important than oil, making them a key resource driving world growth," the two experts said in a report.