The last two weeks we have looked at the problems in microchip production and the daunting demand we are facing. Since microchips are used in almost everything we touch, these issues will manifest in practically every aspect of our lives. Here are some of the consequences I think important.
Patterns of consumption we thought would disappear with COVID probably won’t (assuming COVID is brought under control). Adaptations like pandemic shopping mode will continue. One rule we have is always check for a few items that seem to be oddly hard to get. For Jan it’s a favorite frozen chicken pot pie, for me it’s these PVC 4” caps. Always check for them, whether you need them or not. While the US economy is on track to grow as much as 6% this year, China just announced an 18% annualized growth rate in the first quarter. This suggests shoppers around the globe will be competing for an erratic supply. The Chip Shortage will become the most over-used excuse since it got lost in the mail.
US foreign policy will have to take our dependence on Taiwan and South Korea much more seriously, which raises the stakes in those South China Sea skirmishes. This is also a bad time for xenophobic and anti-Asian rants, even if you feel like it.
Fixing these perceived economic and security risks will require longer term political will, not policy reversals every four years. That’s how we’ve gotten to this point in higher education, for example. Corporations and government have to stop treating investment in R&D as tomorrow’s problem. The quickest way to replenish our scientific ranks is simply outbid for the brains we need. Immigration regulations should reflect this.
For ag, I can’t see how the chip shortage affects our commodity prices unless logistics get hit, Timber and metals will be another story. Farmers need to spend more effort planning capital expenditures, since the dealer inventories are evaporating. We will have little leverage when negotiating machinery prices, and delivery dates will be joke fodder. While I had just written about cutting back our on-farm parts and supplies, those items that could stop harvest cold should be on hand now, or backed up as soon as possible. Remember, it’s not hoarding if nobody knows. If inflation doesn’t pick up this year, we really don’t know what causes it – all the pieces are in place.
Whack-a-mole disruptions will continue in strange parts of our lives. Above all, like the African saying “It takes a village to raise a child”, we now know it takes a globe to make a microchip. Efforts to get along with other nations never had a higher payback.
Related Stories:
Part 1: The Impacts and Implications of the Worldwide Microchip Shortage
Part 2: The Impacts and Implications of the Great Microchip Shortage
