American Tech Colossi Form Coalition to Secure Chip Supply as Shortages Worsen

• A coalition of American chipmakers asks the government to fund new production units and offer taxation incentives.
• The same group is lobbying against an action that would favor the automakers' industry, as that would create problems elsewhere.
• The chip shortages are getting worse, and the estimates place the “crisis exit time point” farther and farther.

Apple, Microsoft, Alphabet (Google), Intel, Amazon, AT&T, Cisco Systems, General Electric, Verizon Communications, Hewlett Packard Enterprise, and various other American tech giants have formed a coalition to help them secure funding for upgrading US-based chip production, as we move deeper into a problematic future in the field. The goal of the lobbying group is to press for government chip manufacturing subsidies, fund the CHIPS for American Act, and introduce tax cuts that will help them bring their Asian-based production lines home.

U.S. President Joe Biden has declared this situation an emergency that threatens national security and has already approved mitigation initiatives of $50 billion. That was done in response to American automakers asking for emergency action, as the chip shortage has hit them hard, forcing entire plants to cease production. However, Biden cannot open the tap on specific industry sectors and close it on others, as the problems are equally catastrophic for everyone.

The ‘Semiconductors in America Coalition’ is asking the United States government to shy away from making a move that would favor the automotive industry as that would immediately hurt other critical areas that are also probably more profitable to serve for the chipmakers. Instead, they ask lawmakers to trust the industry’s self-balancing systems and let the rules of supply and demand play their role in dealing with the situation. Again, that sounds like asking the government to let these companies follow the path to a maximum profit without intervention.

In the meantime, the situation outside of the U.S. is disheartening, and it has become clear that nothing will change until at least 2023. Sony admitted that the PlayStation 5 supply problems would persist throughout 2022, even if they ramp up production and improve the supply of components. According to Sony’s Chief Financial Officer Hiroki Totoki, there’s just no way to catch up with demand no matter what is being done to remediate the situation.

In the GPU space, the shortages are even more dramatic, as problems in that sector are magnified by a set of factors that make up for the perfect storm. Both AMD and Nvidia are doing all they can to ramp up production, but the demand is just disproportional. Two things that could help deal with the situation are: a.) Intel’s upcoming gaming graphics cards, and b.) AMD’s new APU lineup, which will be based on the Zen 3+ architecture and use an RDNA 2 graphics chip.