Milton Friedman once remarked that if the government were put in charge of the Sahara Desert, we would quickly have a shortage of sand. The looming supply problem for the electronics industry isn’t a sand shortage but one of silicon metal used to make semiconductors. SMM News is reporting that government imposed power restriction in China are adversely affecting silicon production.
The insufficient power supply will inevitably lead to a decline in the output in Q4. The impact of the dual control of energy consumption is more significant on the supply of silicon. The major silicon metal producing regions including Yunnan, Xinjiang, Sichuan will have to cut the production, where the silicon plants cannot maintain the normal production from September to November. The power shortage also restricts the production.
BTW, silicon isn’t rare; it’s the most abundant metal in the Earth’s crust. Oh, and a vast array of products uses semiconductors. Even the toaster I bought last year uses an integrated circuit as the basis of its timer.
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