Major chip shortage caused by Trump trade war blamed for PS5 shortage

Pandemic also caused spike in demand for computers and electronic equipment

Graeme Massie
Los Angeles
Thursday 11 February 2021 18:14 EST

Trump claims 'China will own' US if he's not re-elected

A global chip shortage caused by Donald Trump’s trade war and the coronavirus pandemic have been blamed for a shortage of PlayStation 5 consoles and a slowdown in car production.

Sony says the dearth of semiconductor chips are what has made it so difficult for consumers to get their hands on their video games console.

General Motors says it will extend production cuts in the US, Canada and Mexico until the middle of March because of the lack of chips.

They join a list of companies such as Ford, Honda and Fiat Chrysler, who have warned of slowdowns caused by the issue.

Now Joe Biden's administration says it will try and help alleviate the impact on American companies.

“One of the central motivations for the Executive Order the President will sign in the coming weeks is to undertake a comprehensive review of supply chains for critical goods," said White House press secretary Jen Psaki on Thursday.

"The review will be focused on identifying the immediate actions we can take from improving the physical production of those items in the US to working with allies to develop a coordinated response."

The US now only accounts for 12 per cent of global manufacturing of chips, compared to 37 per cent in 1990, according to the Semiconductor Industry Association.

Observers say the impact of the ex-president’s trade war with China has played a key role in the shortage.

But a spike in consumer electronic sales caused by the people buying computers and electronic goods during the pandemic have also had an impact.

People were forced to buy computers and monitors to home school their children and to work remotely as offices shut around the world from March 2020 onwards.

Sales data shows that PC sales were up 4.8 per cent in 2020, the sector’s highest annual growth since 2010, according to CNBC.

And the Consumer Tech Association says that 2020 was a record year with almost $442bn in retail sales revenue.

It is also predicting a big year of sales for items such as games consoles, headphones and smart home devices in 2021.

“The current chip shortage all starts with the unprecedented demand for personal computers and peripherals as the globe worked and attended school from home,” said Patrick Moorhead, founder of Moor Insights, a company that studies the semiconductor industry.

In 2020 the US government placed restrictions on Semiconductor Manufacturing International, the biggest manufacturer in China, which made it harder for them to sell to companies with American ties.

That forced companies to use manufacturing plants such as TSMC in Taiwan or Samsung in South Korea, which were already producing chips as fast as they could.

And if companies cut their orders at the beginning of the pandemic they were forced to join the back of the line, says CNBC.

Car manufacturers also discovered that they were a lower priority for the manufacturing companies, who do a much higher volume of business with electronics companies.

TSMC says it is spending as much as $28bn this year to try and accommodate the auto manufacturers.

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