Global supply chains will be fine
Remember six weeks ago, when that container ship blocked the Suez Canal and everyone interpreted it as a sign of excessive globalization? Turns out everything sorted itself out. It worked out so well that I bet you cannot even remember the name of the ship that got stuck. As I noted at the time, “This is not an all-or-nothing crisis, but rather one in which prices react to real-world shocks and private-sector actors will respond to shifting incentives.”
I bring this up because those concerns about excessive globalization have again gravitated toward global supply chains, particularly in semiconductor chips. This has been a running theme of the past year of pandemic. Throughout 2020, consultants and business publications were banging on about the need to think about supply chain integrity in response to shocks like covid-19.
This concern has increased in recent weeks. Manufacturing output growth in the United States slowed last month because automakers face semiconductor chip shortages. “60 Minutes” did a big story this past weekend on the problem, with Lesley Stahl asserting in her voiceover, “Covid showed that the global supply chain of chips is fragile and unable to react quickly to changes in demand.” Stahl’s report also raises the specter of geopolitical risks posed by Taiwan’s dominance of the semiconductor industry.