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  • (upbeat music) - It's been months

  • and you still can't buy a PlayStation 5.

  • Not only that, Samsung is raising concerns

  • about chip shortages for its phones.

  • And Foxconn says that it might have part issues until 2022.

  • It's not just tech companies either,

  • car companies like Ford and GM

  • have also had to push pause on manufacturing.

  • There's a big problem with computer chips right now.

  • There's just not enough of them to go around.

  • - [Reporter] Massive worldwide chip shortage-

  • - Earnings being cut by up to $2 billion-

  • - We don't have these chips, we're in trouble.

  • - There's a lot of reasons why this is happening right now.

  • Slow downs from the COVID-19 pandemic,

  • a spike in demand of laptops, gaming PC parts,

  • and of course,

  • next gen consoles while everyone's been stuck at home,

  • and lingering effects

  • from former president Trump's trade war with China.

  • It's a decades-long problem, though,

  • that's been building towards this moment.

  • - Let's take a step back year, 2000.

  • We used to have around 30 companies

  • they make their own integrated circuits,

  • but then they discovered that it's cheaper to outsource.

  • - [Chaim] So while almost every major tech company,

  • with one or two exceptions,

  • says that they design their own chips,

  • the reality is that the actual production

  • is done by just a handful of companies.

  • - And we promised that the first Mac with Apple Silicon

  • would arrive by the end of this year.

  • Well, that day is here.

  • - So when Apple says

  • that it was making its own Mac processors last year,

  • that was technically true.

  • Apple does design those chips

  • using designs it licenses from ARM,

  • but then it ships those designs off

  • to other companies to build.

  • In fact, Sony, Apple, Microsoft, Qualcomm, AMD,

  • and Nvidia all use the same company to build their chips,

  • TSMC, or Taiwan Semiconductor Manufacturing Company.

  • And even Intel, which is one of the few companies

  • that does make its own chips has announced

  • that it'll also be outsourcing

  • some of its more advanced manufacturing

  • in the years to come.

  • - We are increasing our engagement with TSMC,

  • Samsung, Global Foundries, and UMC.

  • - In real terms, what that means

  • is Intel's been struggling to keep up

  • with TSMC's manufacturing techniques,

  • and that's left it vulnerable to competitors like AMT

  • which does outsource its chip manufacturing

  • and has been able to benefit

  • from those more advanced techniques.

  • (upbeat music)

  • Trump's trade war with China further complicates things.

  • On the one hand,

  • it's made it harder to work with Chinese chip companies,

  • putting a further strain on that supply.

  • On the flip side,

  • Trump's limitations on companies like Huawei

  • from using US designs means less demand

  • for chip manufacturers like TSMC,

  • at least in the short term.

  • Meanwhile, global demand for chips is greater than ever.

  • - Time has changed and also technology has changed.

  • So now we're no longer thinking a chip

  • is using by a computer is can have so many applications.

  • I think that you differentiate your products in the future,

  • they realize that actually the chip

  • could be the key differentiating factor.

  • - [Chaim] You're not just fighting against everyone else

  • who wants to buy a PS5,

  • you're fighting against everyone

  • who wants to buy an RTX 3090, an M1 Mac,

  • a Qualcomm-powered smartphone, a Ford truck, and more.

  • (gentle music)

  • - So now I think that the pendulum

  • is swinging back to the other side.

  • He say, "Hey maybe we need

  • to have some domestic supply chain

  • such that in case of emergencies or disruptions,

  • at least there is some capability

  • within the domestic region."

  • Intel has just announced

  • they're going to invest $20 billion in Arizona.

  • At the same time, also TSMC from Taiwan,

  • they're going to build a facility in Phoenix.

  • I think that that is only the first wave.

  • - Intel also plans to start manufacturing chips

  • from other companies with interest from IBM,

  • Microsoft, Qualcomm, and Google.

  • And adding another major semiconductor manufacturer

  • to the mix, especially one that won't have to deal

  • with trade wars, tariffs,

  • or security concerns from abroad

  • could have a big impact, eventually.

  • - To build a semiconductor manufacturing facilities,

  • it takes a long time.

  • Intel or TSMC, they are under the gun

  • to create more capacity, but it will take years

  • to build a brand new facility.

  • (gentle synth music)

  • - But these changes are going to be a ways off,

  • and while they might help things down the line,

  • the only real solution to this shortage might be time.

  • - So I think that's the move that Intel is making.

  • And also in terms of TSMC, investing in Phoenix

  • is a good first steps,

  • so I think that we are in the right direction.

  • Because I think that you look at the 5G rollout

  • and the internet of things,

  • and so there will be huge demand for this kind of high-tech.

  • - In the longterm, this could be a catalyst

  • towards a much more efficient supply chain for chips,

  • possibly for other manufacturing too,

  • which means that you'll probably still have to wait a while

  • before you can buy a PS5,

  • but it could mean that you won't have to wait as long

  • before you can buy a PlayStation 6.

  • Thanks so much for watching.

  • If you wanna learn more

  • about the semiconductor supply chain,

  • or when you can finally buy a PlayStation 5,

  • check out theverge.com,

  • we'll have tons more on the YouTube channel,

  • like and subscribe, all that good stuff.

(upbeat music) - It's been months

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The global chip shortage, explained

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    joey joey posted on 2021/06/05
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