What has changed?
In recent weeks, computer chips have suddenly seemed to become abundant. Several computer chip companies have warned that their sales are going from hot to not. Unused chips are piling up in South Korea, a major manufacturing hub, at the fastest rate in years.
A big reason is that people around the world are not buying electronics like laptops, smartphones and TVs as much as they were a year or two ago. Lots of people are worried about climbing prices and the health of economies and are holding back. So companies are cutting orders for computer chips that would have been built into many products.
This is how the economy and computer chips tend to work. When people feel good and are spending a lot, chip factories ramp up to make way more. Almost always, they overproduce and there are too many chips. Some experts have said that the pandemic mania would be followed by a chip bust. We’re not there yet, but we’ll see.
What’s the Biden administration got to do with it?
I’ve written before about the consensus in Washington on putting more U.S. government support behind American chip factories and expertise. Congress has been debating — and is still arguing over — the specifics of spending more than $50 billion in taxpayer money to do so. Most of the world’s most advanced chips are made in Asia, notably in Taiwan and South Korea.
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