The world’s largest chip manufacturer is Taiwan’s Semiconductor Manufacturing (TSMC), which is currently the most valuable company in Asia by market capitalization. TSMC’s technological processes are so advanced that the company produces about 92 percent of all the most complex chips in the world.
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Several factors have contributed to the current shortage of chips. One of the most important is the increased demand for consumer electronics due to the covidu-19 pandemic, but the growth in demand for chips also supports the continuing interest in cloud services and cryptocurrency mining.
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The situation was complicated by covid closures
Chip manufacturers were unable to respond to significantly higher demand, and the situation was complicated by the closures imposed due to the pandemic and sometimes the lack of staff, if some of them had to remain in quarantine due to the covid-19 infection. The lack of chips has severely disrupted the plans of key sectors of the economy.
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The global shortage of chips has probably hit the automotive industry, where these semiconductor components are used in on-board electronics, the hardest, and has forced manufacturers around the world to reduce production. Since last year, the world’s carmakers have not been able to complete their vehicles on time, and delivery times have been significantly extended. The waiting time for those interested in a new car can reach more than a year from entering the car into production.
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Stabilization of microchip supplies is expected to stabilize this year; according to the latest report from the European Automobile Manufacturers Association (ACEA), sales of new passenger cars in the EU will increase by 7.9 percent to 10.5 million this year due to improved chip conditions. But it will be almost 20 percent lower than in 2019, compared to the period before the pandemic.
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The longer-term shortage of chips is one of the biggest risks that could slow down the recovery of the EU economy as a result of the covid-19 pandemic. European manufacturers are largely dependent on chips made in Asia and the United States.
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Massive investment within the EU
The President of the European Commission (EC) Ursula von der Leyen therefore announced this week that the Union will release 11 billion euros (266 billion crowns) to support their development in Europe in an effort to reduce its dependence on microchip imports.
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According to the commission, the massive support of the key technological sector should provoke investments in the total amount of 43 billion euros (almost 1.1 trillion crowns) by the end of the decade. While the EU currently accounts for about nine percent of global chip production, by the end of this decade it should be 20 percent, the head of the European Commission has calculated.
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