Natixis on the global chip shortage and the US-China technology war

The global chip shortage is causing problems for many industries and shows no signs of slowing down, but don’t expect prices for all types of chips to rise, the Asia-Pacific chief economist said. research company Natixis.

Automakers have been hit hardest by the shortage, but the crisis is affecting everything from game consoles to televisions.

But not all industries or products suffer in the same way. In fact, there might even be an oversupply of some chips, according to Natixis’ Alicia Garcia-Herrero.

“These chips that I expect overcapacity for, are the kind of low-end chips,” she told CNBC Thursday. “This is because China is entering this part of the supply chain very quickly with huge investments.”

In other words, Garcia-Herrero said on “Squawk Box Asia,” there will be price segmentation.

“Low-end chips are very likely to have plummeting prices… But for the best ones – the ones that are really relevant to 5G and EVs – we want. So they will have inflationary consequences,” she said. .

The current shortage was in part due to corporate storage as the pandemic swept the world and supply fears grew.

But geopolitics also plays a role.

Amid the tech race between the two giants, the United States last year imposed restrictions on China’s largest chipmaker Semiconductor Manufacturing International Corporation, preventing it from obtaining advanced manufacturing equipment and making more difficult to sell its finished products to companies with ties to the United States.

As a result, some companies have decided to stock essential chips ahead of these restrictions.

Garcia-Herrero said these geopolitical risks will not go away. Both the U.S. government and the tech industry have been pushing to increase the country’s semiconductor manufacturing capabilities to protect against this risk. While some American companies design their own chips, currently the vast majority of the world’s chips are made in Taiwan, South Korea and China.

“This is the problem added to the complications of inflation – that the most valuable part of the supply chain in the United States is going to face a lot of geopolitical risks… and that is not going to change,” she declared.


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About Joaquin Robertson

Joaquin Robertson

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