Why We're Still in a Global Chip Shortage - and Why It Matters.
Semiconductors are the most important technology in today's society. Entire industries, if not entire economies, are at risk when there is a shortage.
In today’s letter:
The global semiconductor shortage has caused massive downstream problems in nearly 200 industries and many companies are now struggling to secure enough chips to meet customer demand for their products. But how did we get here and why is it such a hard problem to fix?
In this new segment, I highlight the most interesting tidbits from the last week(s): Coinbase’s Suberb Superbowl Ad, The EU is eyeing uranium and DuckDuckGo takes on Google.
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Why We’re Still in a Global Chip Shortage
Semiconductors are the backbone of society and without them, society would collapse. They are in everything: Your computer, phone, toaster, and refrigerator. They are crucial for the military, the energy grid, banks, traffic systems, and aeroplanes. Basically, everything that uses power will have semiconductors in them.
The global chip shortage has caused massive downstream problems in nearly 200 industries from the automotive industry to the mobile industry, and many companies are now having a tough time securing enough chips to meet customer demand for their products.
The increasing complexity and need for innovation of semiconductors has led to extreme specialization, forcing both companies and entire countries to focus on limited parts of the semiconductor value chain to stay ahead - this means that today no country is self-reliant in the production of semiconductors.
While this has made the value chain highly efficient and innovative, it also makes it very susceptible to disruption. The semiconductor value chain relies heavily on free trade and close collaboration across borders. All it takes is one part of the process to be delayed for the entire production to halt with ripple effects across nearly every industry on earth.
To learn more about what I’m talking about, check out the video below (Hit like and subscribe, it helps out a lot)!
Coinbase’s Superb Superbowl Ad
During last Sunday’s Superbowl, crypto app Coinbase spent nearly $16 million to air a QR code for 60 seconds. The QR code gave new users $15 and existing users the opportunity to win $3 million in Bitcoin.
Within the first minute of the ad airing, Coinbase received 20 million hits on its landing page. Within 24 hours, the crypto app had jumped from #186 in the App Store to #2.
The EU Eyes Uranium
It looks like the EU is going to classify nuclear power as a renewable energy source. When fossil fuels still make up roughly 80% of the world’s energy a reasonable consequence would be increased demand for nuclear. And thus increased demand for uranium. With the current spot price at $43 and given a significant supply deficit, would it be unreasonable to revisit the previous highs of $140?
How Do You Compete With The Big G?
Search engine DuckDuckGo now receives about 100 million queries a day. They can’t crawl the web faster or better than Google. Instead, DuckDuckGo focuses on user privacy and serving fewer ads - their niche is not tracking users to the extent that Google does. With only 150 employees and low capital expenditures, it seems they have found a way to win over users without competing with Google head-on.
End
That’s all from me folks. If you enjoyed this letter please share it with your friends. It’s free.
Until next time,
Fabian