The Senate May Pass Legislation on Semiconductors Due to Shortage

According to a recent Reuters report, U.S. Senators are preparing some legislation on semiconductors as the country faces a shortage of the devices.

According to Reuters:

“We’re working on that. (U.S. Senate Majority Leader) Chuck Schumer and, I think, (U.S. Senate Republican Leader Mitch) McConnell are about to introduce a bill along those lines,” Biden said amid remarks on his own plan to boost the nation’s infrastructure.

An earlier Reuters report in February pointed out that the semiconductor industry had long been urging the Biden administration to re-fund incentives included in last year’s National Defense Authorization Act.

According to Fast Company, the shortage has hit the automotive industry hardest, but even tech giants like Nvidia and Microsoft can’t provide as many graphics cards or gaming systems.

Apparently, the issue isn’t just the result of a global pandemic. There also appears to be a monopoly on the business.

Fast Company:

As much as 70% of the world’s semiconductors are manufactured by just two companies, Taiwan Semiconductor (TSMC) and Samsung.

The entry barriers into semiconductor manufacturing are astronomically high. There’s a steep learning curve required to set up a semiconductor foundry, entailing an upfront investment of $10 billion to $12 billion and then at least three years to become production-ready.

Never mind the fact that demand for the product is incredibly high as more and more product categories are forging digital breakthroughs.

Technologists, IT departments, and other directors of digital assets may see price increases in common gadgets if this shortage persists.

It’s hard to say if any bracing actions should be taken: is it wise to hold off on investing in, say, new laptops if the price of them may be pushed by the time such investments are approved?

Hopefully, incoming legislation should steady the price of semiconductors for the foreseeable future.