to me an estimated bill $1000000000.00 a year. some of the other there are tucked up suddenly pockets on car 2 for a special series on pakistan's water challenges. some a been job a takes us to the himalayan mountains, were melting glaciers. pose a risk for communities. you can watch, starting at o 200 hours gmc on saturday. ah, hello again. the headlines on al jazeera, more than 2000 flights, have been cancelled globally on christmas eve. the latest blow related to the on the con, variance of covered 19 with tons, a united on delta say the virus has taken a toll on their stuff. gabriel is on there has more from the newark airport delta, one of the major carriers here in the u. s announced over a 125 cancellations on friday, united airlines to another major airline here in the u. s. over a $160.00 cancellations. they say this is all due to

a pilot flight attendant and other staff shortages staff that have been hit by the new army cranberry. and that is hitting the northeast of the united states in jersey. washington dc, new york particularly hard new york city, in fact, is the us epicenter of the re, cranberry and the u. k. prime minister born johnson is urging the public to get a booster vaccine shot over the christmas holiday. appointments for over 1000 vaccines are being made available on christmas. on boxing day. johnson has largely resisted calls for tater restrictions over the festive period. despite the fall spread of the army, crown variance, at least $39.00 people have died after ferry caught fire and bangladesh. breski themes managed to save some passengers, but local sources save the death toll is likely to rise. the ferry was overcrowded, with up to 800 people on board. south korea government has pardon former president

parkman, hey, who's been serving a 22 year prison sentence for corruption. the justice ministry says it's to heal national divisions. google and metal have each been fine, tens of millions of dollars by russian court or failing to delete content. the country deems illegal. it comes to the government says introduce several new laws targeting online platforms. police in the northern indian state with our account launch the hate speech investigation following a meeting of into religious leaders. videos from last week's event showed them calling for a genocide and violence against muslims. because the celebrations taking place in bethlehem, the biblical birthplace of jesus christ. the town in the occupied west bank has been almost deserted, as israel has effectively suspended for in tourism because of the corona virus, han demick will have more news at the top of the hour on al jazeera affects his inside story, but by ah,

microchips are in almost every electronic product, but there's a global shortage affecting cars. i take gadgets and even fighter jets. so why are supplies so low and could the race to make up the shortfall ignite political tensions? this is inside stored. ah . hello and welcome to the program. i'm hammer, jim, jim, they're in our smartphones, computers and cars, even appliances like coffee machines. semiconductors are in almost every electronic

item we use, but they are in short supply around the world. taiwan is the dominant player with nearly 60 percent of the global market, but production has slowed because of measures to combat a surgeon cove 19 infections. the islands, worst drought on record, is also having an impact as the industry uses large amounts of water. the auto industry is one of the most effective car makers, like ford and general motors have shut down factories, laid off workers and cut production. one manufacturer has warned the disruption could lead until next year. the u. s. south korea and china are pumping money into their own industries to become more self reliant in march beijing wave taxes on imported semiconductor materials. but china's main ship maker is under us sanctions for alleged ties to its military. the u. s. senate recently approved $52000000000.00 for america semiconductor industry. as part of a tech innovation bill. as a percentage of g d p, we spend less than half as much as the chinese communist party. on basic research.

we rely on foreign nations to surprise credit supply critical technologies that we invented like semiconductors, that sunny american optimism has flickered as well. the world is more competitive now than in any time since the end of the 2nd world war. if we do nothing, our days is the dominant super power may be ending. ah. all right, let's bring our guests in, sol, june park, a political economist, and an east asia voice, his initiative fellow at george washington university. in new york city. jim anderson's ceo of social flow, a tech company, and in miami, june teufel, dryer professor of political science at the university of miami, and editor of taiwan. and the era of sy in when a warm welcome to you all june park. let me start with you to day. what is causing

this shortage and why is the situation currently so dire? the pandemic that has begun at the end of 2019 has basically altered the business planning cycles for many of the industries that we see in connection with the chip shortage. and the most vulnerable sector in this chip shortage crisis was the automotive sector. the automobiles sector, because usually when the chips orders are sent in the, the primary consideration was given to other products such as the mobile mobile phones or computers or any other equipment that we have used in order to get connected during the pandemic. so that's why we have the shortage at the

moment. june teufel dryer, let me ask you, what is the overall impact of all of this? i'm talking about the impact on businesses and also on consumers and just folks who want to get, you know, the latest smartphones. well, we may have to wait for a long time. and i know my grandsons are at the age where they think they will die if they don't have the latest in the electronic equipment. and they're just going to have to get on a waiting list. but if i may add something, and by the way, i've never been on a program before with another june. so please, to sort of neat, you did a lot of things are being blamed on the pandemic. and in truth, it did disrupt an awful lot of things, but i have to go with mark leo who is d t s m c chairman the day, the guy who runs the day to day operations because now

a marsh john the founder, although and very jury alert and hale and hearty, 89 year old has withdrawn. and he said something interesting. and he said that it was only partially due to the pandemic and a, but it was also due to manufacturers stockpiling ships. and that you have to distinguish between real demand and stock piling for inventory. and he thinks a lot of this is because of stock piling for inventory. jim, let me ask you from your point of view, how long is it going to take for production to catch up with demand? there are some who suggest that this could take at the very least 2 years. does that timeline sound about right to you, or do you think it could be even longer? yeah, i think 18 to 24 months is a good estimate. but as june said, june 24 dryer, you know, there could very well be some stockpiling here. supply chains are increasingly interconnected around the world. you know,

who knows what individual companies are stock piling, what i suspect supply and demand as prices rise. you know, that certainly changes the dynamics. you know, you may be willing to wait for a game console if the price goes up on it, that, that has an impact, but certainly there, there needs to be more capacity, more supply and 18 to 24 months, i think is a good estimate for that june parker, the us, china, and south korea. they are giving incentives to try to ramp up local production. how are those efforts going thus far, and how long do you think that's going to take? well, as, as far as the hallway banner is concerned, is ongoing. at the moment and as much as the decoupling process continues. in this regard, china is going to keep on trying to build a self sufficiency within its domestic environment. south korea and taiwan are investing both in the us and in their homelands. south korea has recently launched

a k bell cluster k chip bells cluster, which basically entails foreign companies such as do paul, s and mel participating. but at the same time, some phone electronics basically s k high next memory chips and nan flash. their focus is not just going to be on memory chips, but also on system chips. taiwan, at the same time, is going to invest heavily with in taiwan while maintaining the leverage in the u. s. by expanding production facilities. so we'll have to see how this unfolds. into 2023 and into a longer term, maybe the next 10 years june tore full dryer. let me ask you. taiwan, we know has almost 60 percent of the market when it comes to semiconductors. is there any possibility that we could see taiwan? try to use this shortage of semiconductors as

a political tool. well, the taiwan is very, very careful. m d momentum recently and i would say in the last 5 years, just because china has become so increasingly aggressive across the board. ah, you, we don't have time to get into it here. i'm sure that united front work activities aimed at subverting the democratic process in a number of countries and expansionist activities in the south china sea in east china sea. and they have really ramped up a, a, an anti china coalition which is still nascent and, but this has benefited taiwan since odd people now see, instead of china saying, we deserve taiwan. it's ours, or it ought to be ours. they're seeing a very aggressive china and their, their fort becoming much more sympathetic to taiwan. so in a way, time one doesn't have they use this as a political to,

it's already got it. and you hear people in the publications saying if china were to invade taiwan, which it keeps threatening to do, and is certainly making gestures in that direction up that would destroy taiwan semiconductors, manufacturing corporation, and china would be the big loser as well. so in a way taiwan is in a, in a good position and in that sense, and it doesn't have to be overtly look at what we've got and what you'll lose because i think most of the world is already aware of what would be lost. jim, are there any viable or concrete short term solutions that could help with this shortage? not to producing more chips on other than, you know, making sure your capacities or your factories are at capacity. if you can do over time shift those kinds of things, i'm sure those things are already being done as they try to boost production. but

in terms of building new plans, you know, it's going to take you 18 to 24 months. it's a notoriously capital intensive build business. you know, there are thousands of steps involved and there's a significant amount of expertise and proprietary knowledge involved and developing these chips, which is how you end up with such a dominant company. you know, they just did it better than others and you ended up with a dominant market position. so i think probably the bigger issue will be the supply and demand as prices rise, that will tend to reallocate ships. not entirely because we do have some stock piling, but that will tend to reallocate chips to the highest value uses. and you may very well just end up waiting more for going game consoles or phone upgrades or those kinds of things, which is not, not a trivial issue. it has an economic impact, but certainly doesn't seem to at least have currently structure rise to a national security issue. in june park, i saw you nodding along to some of what jim was saying there. did you want to jump in and expand, expand on the point that he was making what some of the dynamics between south

korea and japan have not been resolved. and i think in connection with what jim was mentioning, the export curves that began to years ago by japan on some of the crucial components of semiconductor production. again, south korea really reveals that the u. s. and japan are hoping to benefit from this disk with a couple of process. and there is a g geo political dynamic in this because either you belong in this supply chain or you don't. so that will accelerate the geopolitical divide into the coming years. and the export curves are not ended. the hallway band is still in place. we'll have to see, not just the economic dimensions of this, but the geopolitical dimensions as well. june teufel, dryer, of course said june parker was talking about the acceleration of the geopolitical

divide. and that leads me to something i wanted to ask you, which is could this race to make up for the shortfall ignite political tensions? i'm not sure of because he, a chinese government of course is the, is the, the reason for most of these political tensions, things were going fine until the chinese began is to use computer chips and rare earth and all kinds of things as economic weapons. so i think there or did they, did geo political tensions are, are already there and ice. i don't think they're going to get any worse because of this, but in a time on has the money, morris chang and is uh huh. i don't know who's the richest person in the world, but he's certainly up there. not him personally, but his corporation does have the money. and taiwan does have the talent. i

remember when i was in college, the top of the class at mit was always on taiwanese, the rope, half a dozen, taiwanese and in the top 10. and they've still got the talent, they've got the money and they've got the geo political impetus. you know, if we don't stay ahead on this, we could be obliterated. so i think the geopolitical cards are still in play and they're not getting get any worse. but on the other hand, they're not gonna get any better. tim, if we're talking about, you know, the geopolitical cards in play right now i'm from your perspective, how is this race playing out between countries for technological supremacy for technological independence, especially when it comes to semiconductors. yeah, this is just one piece on the chessboard. if you will, and it is an important piece, i mean, technology is become such an important part of our lives. and in many ways, economic security is national security. but the thing i can help but,

but thank is wow, 2 years to sort of correct an imbalance in supply of chips. it's an incredibly short time as it relates to geo politics. we're talking about things that unfold over decades as it relates to the say, the us china relationship. and i think there is bound to be an oversupply, say 24 months down the road. you know, when you end up with a shortage of things and everybody rushes, and especially if there's a lot of government money at stake, to correct a supply and balance. what happens with the other side. and people who studies supply chains for a living have a bang for this is called the bowl web effect. which means you know, you, you over correct the other way. so i have a sneaking suspicion that 24 months from now we'll be having a conversation about a massive oversupply of semiconductors and, and depressed prices and the problems that result from that. so how that plays out geopolitically, you know, we'll have to see it, especially as it relates to china. but it's, it's a pretty short term issue as it relates to the politics, june parking, when it comes to making more chips and countries ramping up production. i mean,

the reality really is that, you know, it is still going to take time. but even when it does happen, when orders are placed, it could still take several more months for those all to be delivered, right? that's correct and say for example, when tom phone decides to build a factory with the $17000000000.00 plus that it made during the us. okay. in may or when taiwan finally expands the foundries within the united states, they have pledge 66 different places, including arizona. when these foundries have been completed, it would take time until the completion. but when they are completed, you would imagine a different scale of production within the united states with, with the hallway band or not. we are expecting to see a huge,

huge production amount coming from the united states. plus with the innovation drive that the u. s. is pledging for itself, i think there would be a huge change, a significant change upon the landscape of semiconductor industry. then, what would be interesting to see is how europe responds to this the, the contact lists economy will accelerate even during the, or post pandemic during the post pandemic period. the need, the, the demand for chips is not going away. it would only be expanded and the digital economy will continue to expand as well. june teufel, dryer, in your previous answer, you mentioned rare earth elements, and i wanted to bring that up because you wrote a piece last year analyzing china's monopoly on rare earth elements. so i wanted to ask you, how does that play into all the semiconductor industry concerns over shortages

going forward? well, it, it plays into china's whole of government and whole of society attack on problems. and it's, it's a very, very well coordinated one. ah, no matter whether you are a pro china or anti china, we're just nick china. ah, you have to admit they have played their him brilliantly. now, a rare earth or non, a major component of semiconductor chips. they are mostly silicon, hence silicon valley and germanium, which is not a rare earth, so odd, but at the same kinds of techniques are, are seen when china decides to do something. it decides to do it in a very coordinated way. and this is certainly a very coordinated way. and the problem with democracy is in general, and this is a bigger problem for the e u,

because they've got so many democracies with different interests as coordination. 8, i have been told that a foundry cost between $10000000000.00 and $12000000000.00 to make just the, depending on what you want, what kind of chip you want to produce. and that after you make it, it's going to take at least 5 years to become profitable. so in other words, government support is necessary. now, china has the type of government that is willing to support that. joe biden says he's willing to support that. um, it's harder obviously because of the way our economy is structured with a lot of private input. and in the case of the you really, really hard because even though the french and the germans and the british, which of course aren't in the you anymore. i pretend to be very friendly. ah, the national rivalries are still there. june park,

i saw you reacting to some of what june teufel dryer was saying, so i wanted to get your reaction, but i also wanted to ask you about, you know, is there a lot of worries or a lot of concern the china is hold on rare earth elements sector is so strong that it could be used against everyone else for the rare earth element, i would think that there has been previous cases in the w t o for china, because china with held them. when there was a class between japan and china over those think a good the, i think with the islands and that kind of precedent leads me to believe that in subsequent years, when the global supply chains are much more politicized than now, there is a high possibility that currently the 100 day supply chain review does list rare

earth as one of the elements that the u. s. as is very much going to be fixated on into the coming years. but it's not really exercised as a ban at the moment. as in the form of se, hallway ban. so we would likely see some kind of a policy mechanism to sort of secure some of the rare earth elements, especially coming from africa because china already possessed is a huge, huge sum of the rare. or it's that if discoverable in africa, so there may be in fighting amongst countries that would be in, in need of the rarer gym. this dependency on taiwan when it comes to semiconductors . how worrying is that to western countries? i think it's really worrying. i mean, when you talk about some conductors and technology in general, you know,

having that kind of dependency, especially in a place where china clearly has ambitions, you know, i think that elevates the concern. again, you know, from a geo political perspective, as we were talking about before you, i think, you think in terms of decades, not one or 2 years, but it's just a lot of the kinds of dynamics they can play out. and the importance of these, the technology issues, especially in a sector where you're talking about $10.00 to $12000000000.00. i mean, that's a government level investment. it's very difficult for private companies to make $10.00 to $12000000000.00 investments with a 5 year payback. as jim was talking about without some form of form of government subsidy and, and actually very well stated, have been in a democracy. it's very hard to do that compared to a more authoritarian state. so i think there's a pretty high degree of concern in general about this kind of dependency. again, i'm not sure the acute concern is there, i've not heard anybody talking about, we're not going to be able to be able to get the kind of military hardware we need or there's going to be a giant economic impact. it's more, it's going to take you longer to get your cell phone is going to take you longer to

get your playstation, which is a, is a concern, but it's more about where it could go than it where it is today. june teufel, dryer, in terms of competition, how far ahead are the taiwanese several years and making steady progress. they're not sitting on their laurels at all. and they've got some amazing talent and they've got a very efficient educational system. and you don't have to persuade, no, it's not like the united states where we almost have to bride students into stem pro august them study prior programs. they've got their eager and willing, and i so i think there are, and they, they understand critically that this is important to their future as an independent sovereign state. so i think they are going to be able to maintain that momentum. now there have been problems a taiwan company, micron, but they did some an employee. there was a found guilty of

a bar selling secrets to china. these, these, i tick silicon chip secrets to china. so it's not perfect, but they've got the momentum and they've got the will to stay ahead. so i think they probably will. june park, aside from everything else. we've discussed joe during the program today. i want to talk to you for a moment about specifically the coven 19 outbreak in taiwan. did that further disrupt the semiconductor industry? and how much concern is there that that could really make things much worse? at least in the short term? i think the within time one, there may be an increase cases compare to the previous months that taiwan has experienced. but taiwan has had quite a model month model. sort of a good example case of the corporate 19 pandemic recovery

process. and i think that with vaccination provided by the united states, taiwan received moderne le vaccines. and within several months, i think taiwan would be able to recover from its current phase and possibly into a more rapid pace into recovery. all right, we have run out of time, we're going to have to leave the conversation there. thank you so much. all of our guest, june park, jim anderson and june teufel dryer and thank you to for watching. you can see this in all of our previous programs again, anytime by visiting our website, algebra dot com. and for further discussion could work facebook page. that's facebook dot com, forward slash ha inside story. you can also join the conversation on twitter. our handle is at a j inside story for me and how much i'm doing in the hoping here. bye for now. the

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