(WATCH) Silicon Shortage

We begin today with a deep dive into a topic you’ve probably heard mentioned a lot since the Covid chaos: the global computer chip shortage. It’s cost American companies billions of dollars and impacted availability of countless consumer electronics from cars to smartphones. Even worse, it affects the military and medical supply chains. One thing it’s hit home is how ill-advised it is to rely on an adversary — China — for something so crucial. Today, we’re off to Germany and a center of global efforts to cure the world’s Chinese chip addiction.

The following is a transcript of a report from “Full Measure with Sharyl Attkisson.” Watch the video by clicking the link at the end of the page.

Our first stop is a workshop situated inconspicuously in the backyard of a repurposed home. At work is a small team from a cutting-edge robot programming company, Wandelbots.

Jonas Schreiber: And you see two colleagues of mine just working with the robot.

Jonas Schreiber is a Wandelbots executive.

Schreiber: So, Wandelbots is a robotics technology company, enabling people to work with robots incredibly easily and intuitively.

Theirs is but one growing success story in the high-tech cluster of Saxony in eastern Germany.

Schreiber: So we are partnering with different companies from the industrial segment, and they are also of course delivering to big semiconductor businesses like Intel, Global Foundries, and Infineon.

Sharyl: But do you feel there’s something special going on here that’s not happening in other places in the world?

Schreiber: Yeah, I think this area has a lot of ingenuity also due to its historical past, so that people are really creative in solving industrial challenges.

Saxony, East Germany was Communist-controlled until 1990, after the Berlin Wall dividing East and West Germany came down. Left behind, a rich pool of highly-skilled, hardworking microelectronics engineers.

Thomas Kralinski is Saxony’s state secretary for economic affairs.

Thomas Kralinski: We call it “Silicon Saxony.” And it comes actually already from the communist East German times, where we had productions and development of semiconductors here as well. This was sort of the base for everything what came like in the last 30 years.

Today, the region is the heart of Europe’s semiconductor or computer chip-making efforts. And site of showcases like the Robotics Festival.

Sharyl: Can you characterize how active things are in terms of the tech industry in Saxony now?

Kralinski: All of the firms are thinking, or on the way of thinking, of expanding their facilities. And I think Europe is thinking more about being sovereign when it comes to producing chips. We have about one third of the European production of chips here in Dresden, which is quite a lot, but on a worldwide scale, it’s not too much. And it can be more.

Sharyl (on-camera): Here in Europe and in the U.S., the goal is to reduce longstanding dependence on companies in Asia to avoid a repeat of the critical chip shortage after the Covid shutdowns. It’s impacting sales of everything from cars to iPhones and Mac computers.

It’s America that invented semiconductors. Today they’re used in cars and thousands of electronics we use every day. But the U.S. produces just 10% of the world’s chips. Europe accounts for another 10%, mostly made here in Silicon Saxony.

Taiwan makes two-thirds of the global supply. With current tensions between Taiwan and China, which controls the island chain, the chipmaking imbalance poses national defense concerns.

The U.S. CHIPS Act, passed in August, aims to address concerns with $280 billion taxpayer dollars to pump up computer chip production and high-tech research. Europe is working on its own CHIPS Act, and governments around the globe are spending billions on similar efforts.

At a stop in Berlin, we spoke to Monika Lischke, with top chipmaker Intel.

Sharyl: Is this the biggest single initiative Intel’s had?

Monika Lischke: Yeah.

She tells me that Intel is spending $20 billion to build a mega-factory here in Germany. It’s making a similar investment in Ohio — its first new manufacturing site in 40 years — and expanding sites in Ireland, Oregon, New Mexico, and Arizona.

Sharyl: Would you say that there’s been an over-reliance — in terms of what was wise economically — an over-reliance on chips made in Asia?

Lischke: Well, we’ve seen, unbalance in global supply chain. So, currently, it’s like 80% is being produced in Asia, and 20% it’s like a split between United States and the European Union. So it’s 80/20. So our long-term goal within the industry is to kind of come to 50/50. So 50% Asia and 50% then between the United States and the European Union.

Our final stop is a drive south from Berlin to Dresden where another company, Global Foundries, is playing a big part in the new chip drive. Executive Jens Drews shows us the company’s expansive Saxony factory — Europe’s biggest.

It includes clean room floor space of more than 560,000 square feet. Here, they make chips for electronics like the Amazon Echo, Apple watches, and smartphones.

During Covid, Global Foundries ramped up rather than shut down, and announced expansion of its Saxony site and U.S. operations.

Sharyl: In the United States there’s talk about over-reliance on Asian producers when it comes to computer chips.

Jens Drews: Well, it’s the case worldwide. And so, in Europe and in the U.S., discussion began: “What happens if we are vulnerable because the supply chains no longer work?” And I think the chip shortage was not politically inspired. It just happened because demand and supply were out of whack. But now the realization is that we should not be completely dependent on two or three countries in pretty volatile region.

Whether it’s here in Saxony or in the U.S., more companies and governments than ever are turning up the dial on production. In the end, even with the new infusion of billions of dollars— it will take years to shift the global chipmaking balance. But supporters say at least the switch has been flipped on.

Sharyl: Do you think this whole landscape is changing now in a way we haven’t seen in many years?

Drews: It’s on the way to correct basically neglect of this industry for many decades in the U.S. and in Europe. And there’s now a new sense of realism, a new sense of urgency. The whole healthcare relies on electronics. Car safety has made tremendous progress with the help of microchips. Our ability to communicate virtually for free, to send pictures, send messages, to stay connected with people around the globe — that is all due to microelectronics. And we haven’t seen the end yet.

Sharyl (on-camera): By the way, Silicon Valley and Silicon Saxony are so-called because silicon is the material most commonly used in chips. It’s considered an ideal and inexpensive semiconductor of electricity.

Watch story here.

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1 thought on “(WATCH) Silicon Shortage”

  1. It’s no surprise to me. I’ve watched it happen live for many years. Businesses moving operations out of USA, Going to countries with cheap labor markets, low or no taxes. Anti business mentality by congress & senate. What did you expect to happen? Now years later everyone, all of a sudden, wakes up. Knee jerk politics as usual. Industry leads while nit-whit politicians are always the last over the fence.

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