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September, 2021 MANAGEMENT


How Tech Leaders Can Hack the Microchip Shortage By Maziar Adl, Co-Founder and CTO, Gocious


T


he global microchip short- age is expected to extend beyond 2022, and it’s more


complicated than meets the eye. The automotive and consumer tech manufacturers bear the brunt of the bad headlines, but virtually every industry has been impacted. While the initial cause is still


debated, there is no doubt the COVID-19 pandemic escalated the severity of the chip shortage. Like panicked consumers stocking up on toilet paper before the crisis, global producers of chip-powered products began over-ordering and hoarding chips. However, manufacturers


impacted by the chip shortage can turn this electronics supply chain risk into a strategic advan- tage by updating their technolo- gy and working with home- grown startup chip companies.


Supporting National Talent The chip shortage is a global


problem. With much of the chip- making power housed in Taiwan and China, governments should consider the impact of global tar- iffs and trade regulations in place when examining supply chains, as well as what financial incentives (such as tax credits) are given to home grown compa- nies looking to upstart chipmak- ing locally. The current U.S. administra-


tion has proposed significant spending to boost U.S. semicon- ductor production and research. This spending would have a posi- tive impact on diversifying chip- making, but it will also take time for that spending to trickle its way down through the supply chain. It will be important to sup- port legislation that brings chip


production into the U.S. This al- so helps to improve IoT privacy and cybersecurity. Chips are the engines be-


hind every IoT device, and there is concern that hackers can easi- ly access more devices if they’re all manufactured by one compa- ny, or in one foreign country. Diversifying the chip manu-


facturing market and increasing the number of chips that are made and regulated in the U.S. makes it more challenging to hack devices and threaten the safety of consumers. Even with these adjustments to create a self- sufficient U.S.-based semiconduc- tor industry, the American work- er must remain a priority. The Biden administration


must support training programs that build up the next generation of domestic chip builders. An ed- ucated workforce can make the U.S. stand out from competitors and create a rich field of dynam- ic and effective labor partici- pants ready to meet the needs of the current market and support American industry. Without a knowledgeable and effective la- bor market, manufacturers will look elsewhere.


Room for Startups As with any classic problem


Navigating the Challenge of the American Marketplace


Helping international advanced manufacturing companies to accelerate strategic growth in the American market through direct operational management and expert guidance.


Getting Started in the Americas


Restructuring Your American Operation


Managing Your American Operations


Advising Your Board of Directors


Accelerating Growth Through M&A


Wherever you are on your journey to expansion into the American market, we can help. Contact us to discuss how we can grow your business, together.


+1 203 226 8895 sales@allianceamericas.com allianceamericas.com


of supply and demand, the cen- tral solution to the global mi- crochip shortage is increasing manufacturing capacity across the board. It’s not always this simple. TSMC, the Taiwanese firm responsible for roughly 60 percent of chip production glob- ally, as well as Intel are both do- ing their part to scale up their manufacturing operations, in- vesting millions of dollars in building out more chip factories and hiring more workers. However, there is ample op-


portunity for savvy startups and investors to enter the chip space. These companies have an uphill battle, but with the high risk of starting up in a complicated space comes a chance to cash in on the rampant demand for chips. Chip startups looking to take on this challenge should be wary of the difficulty of developing new and innovative technology to beat their market-leading competitors. It takes groundbreaking


tech to become instantly compet- itive with a Goliath like TSMC or Intel, and other major tech play- ers like Google and Nvidia are racing to do the same. Building


chip production facilities cost ad- ditional time and capital. De- spite these obstacles, some start- up competitors will break their way through — and all will be good for diversifying a heavily backed-up supply pipeline.


Chip Specialization As more startups join the


field, one potential solution for avoiding some of the obstacles that come with taking on a major player like TSMC is specializa- tion. Chips perform different functions for different devices — the chip produced for a car is not the same as a chip produced for a smart home device. Startups that turn this challenge into a strategic advantage and that specialize in developing one chip could be the biggest winners of the chip crunch. A niche company could pose


a real threat to chip market lead- ers if their product is made well, advances technology against the current leading option, and caters to the needs of a specific industry.


Manufacturers should look


towards innovative chip special- ists, rather than overseas mass producers, as an opportunity to get chips faster while updating their technology. The demand for chip-pow-


ered devices is only growing in the U.S. and globally, so compa- nies that can master a specific market show a promising future for bridging the gap in the cur- rent chip shortage.


Turn the Chip Around The microchip shortage is


like the Suez Canal blockage that occurred earlier this year, only on a grand scale. The pan- demic heightened an already dire supply chain problem. The need for diversification


was a key takeaway for business leaders who learned from that event and the same is true here. By encouraging the growth of more new chip companies, both from governments and the private sector, the bottleneck effect that is now plaguing manufacturers will not be so harsh in the wake of un- foreseen risk events, including fu- ture global pandemics. Contact: Gocious, LLC, c/o


5W Public Relations, 299 Park Avenue, Floor 10, New York, NY 10171 % 212-999-5585 E-mail: info@5wpr.com Web: www.gocious.com r


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