you are. >> that's right. ♪ anchor: here is a check of the headlines. derek chauvin has been sentenced to 22 and a half years for the murder george floyd to prison. george floyd died after derek chauvin knelt on his neck for nine and half minutes. the judge said derek chauvin abuses power in a position of trust and authority. >> count one, you are committed for 270 months, 10 year addition

to the sentence of 150 months. this is based on her abuse of a position of trust and authority, and also the particular cruelty shown to george floyd. you are granted credit for 199 days served. anchor: the flam family welcome, saying the case is exceptional and accuse the police of killing black people without consequence day after day, year after year. the u.s. president has met his counterpart, as u.s. troops repaired to leave afghanistan. he said he respected joe biden's decision, and the partnership between the two countries is entering a new phase. >> the afghans will have to decide their future, what they want, but not for lack of help. the senseless violence has to stop. it will be very difficult.

we will stick with you and do our best to see to it you have the tools you need. anchor: a funeral procession has been held for an outspoken critic of the palestinian president mahmoud abbas. he died after being arrested and being beaten by palestinian forces, accusing them of violations and calm off western nations to cut off aid to the group. those of the head signs on "al jazeera" and "inside story" is next. bye-bye for now. ♪

♪ anchor: this is "inside story." ♪ hello and welcome to the program. they are in smartphones, computers, cars, even coffee machines. semiconductors are in almost every item we use, but in short supply around the world. taiwan is the dominant player with 60% of the global market. production has slowed. the worst drought on record is also having an impact, as the industry uses large amounts of water. the automobile industry is one

of the most affected, shutting down factories, playing off workers, and cutting production. when manufacture said the disruption could extend into next year. the u.s., south korea, and china are putting more money in industries of their own to be more self-reliant. china's main chipmaker is under u.s. sanctions for ties to the military. the u.s. senate approved $52 billion for america semiconductor industry as part of a tech innovation bill. >> as a percentage of gdp, we spent half as much as the chinese communist party on basic research. we rely on foreign nations to supply critical technologies we invented, like semiconductors. that sunny american optimism has flickered as well. the world is more competitive

now than at any time since the end of the second world war. we do nothing, our days as a dominant superpower will be ending. ♪ anchor: let's bring in our guests. and so, korea -- seoul, korea, and in new york city, jim anderson. and in miami, june dreyer, professor of political science at the university of miami and the editor of a book on taiwan. a warm welcome. june park, what is causing this shortage and why is the situation so dire? june: the pandemic that began at the end of 2019 has basically altered the business planning cycles for many industries we

see in connection with the chip shortage. the most vulnerable sector in this chip shortage crisis was the automotive sector, because usually when the chips orders are sent in, the primary consideration was given to other products, such as the mobile phones or computers or any other equipment we have used in order to get connected during the pandemic, so that is why we have the shortage at the moment. anchor: june, what is the overall impact, the impact on businesses, consumers, and folks who want to get the latest smartphones? june: we may have to wait for a long time. i know my grandsons are at the

age where they think they would die if they don't have the latest electronic equipment. they will have to get on a waiting list. if i may add something, and by the way, i have never been on a program before, so pleased to meet you. a lot of things are being blamed on the pandemic, and in truth, it did disrupt a lot of things, but i have to go with the tsmc chairman, the guy who runs the day-to-day operations, because the founder, although a very, very hale and hearty 89-year-old, he has withdrawn the bit, and he said something interesting. he said, it was only partially due to the pandemic, but it was also due to manufacturers stockpiling chips, and that you

have to distinguish between real demand and stockpiling for inventory, and he thinks a lot of this is because of stockpiling for inventory. anchor: jim, from your point of view, how long will it take for production to catch up to demand? some suggest this could take at least two years. is that right or longer? jim: that is a good estimate. as said, there could be stockpiling. supply chains are interconnected around the world. who knows what companies are stockpiling what. i suspect as prices rise, that changes the dynamics. you may be willing to wait for the game console. that has an impact. there needs to be more capacity, more supply, and 24 months is a good estimate for that.

june park, the u.s., china, south korea are giving incentives to ramp up local production. how is that going and how long will that take? june park: as far as the one concern, it is ongoing at the moment. it is not just the decoupling process, but china will continue to try to build self-sufficiency within its domestic environment. south korea and taiwan are investing in the u.s. and their homelands. south korea has recently launched a k-chip belt cluster which entitles foreign companies participating, but samsung electrionics, sk hynek's, the

focus will not just be memory chips, but system chips. taiwan will invest heavily in taiwan and maintaining leverage in the u.s. by expanding production facilities. so we will have to see how this unfolds into 2023 and maybe the next 10 years. anchor: june dreyer, taiwan has almost 60% of the market when it comes to semiconductors, is there any possibility we could see taiwan tried to use this shortage of semiconductors as a political tool? june dreyer: i would say the momentum in the last five years, just because china has become increasingly aggressive across-the-board, you may not have time to get into it here, but united work front activities

aimed at subverting the democratic process in a number of countries and expansion's activities in the south china and east china seas. they have ramped up in anti-china coalition, which is still nascent, but this benefited taiwan since people now see instead of china seeing -- is saying we deserve taiwan. they are seeing an aggressive china, and therefore becoming more sympathetic to taiwan, so in a way, taiwan does not have to use this as a political tool. it has already got it. you hear people in publication same if china -- saying if china were to invade taiwan, and it has threatened to do and is making gestures in the direction , that would enjoy taiwan

semiconductors manufacturing, and china would be the bigger loser as well, so in a way, taiwan is in a good position in that sense, and it does not have to be look what we have got and what you would lose, because most of the world is aware of what would be lost. anchor: jim, are there viable, concrete, short-term solutions to help with the shortage? jim: not other than making sure your factories are at capacity, overtime shifts, those kinds of things. i am sure that is being done to boost production, but it would take you 18 to 24 months to build a new plant, a capital-intensive business with thousands of steps and a significant amount of expertise in proprietary knowledge in developing these chips, which is how you end up with a dominant company.

they did it better than others and have a dominant market position. the bigger issue be the supply and demand. as prices rise, that will allocate, reallocate to the highest value uses, and you may wait more for game consoles, phone upgrades, or those kinds of things. it's not trivial. it has an economic impact. but it is not a national security issue. anchor: june park, you were nodding to what jim was saying. do you want to expand the point he was making? june park: the dynamics between south korea and japan have not been resolved. in connection with what jim was mentioning, the export curbs that began two years ago by japan on the crucial components of semiconductor production

really reveals the u.s. and japan are hoping to benefit from this decoupling process. there is a geopolitical dynamic in this. either you belong in the supply chain or you don't. that will accelerate the geopolitical divide into the coming years, and the export curbs have not ended. the ban on huawei is still in place. we will see not just the economic dimensions, but the geopolitical dimensions as well. anchor: june dreyer, she was talking about the geopolitical divide, which leads me to ask, could this race to make up for the shortfall and not political tensions? june dreyer: i am not sure, because the chinese government is the reason for most of these political tensions.

things were going fine until the chinese began to use computer chips and rare earths and all kinds of things is economic weapons, so the geopolitical tensions are already there. i don't think they will get worse because of this, but taiwan has the money. morris chang, i don't know who is the richest person in the world, but he is up there, not him personally, but his corporation does have the money and taiwan does have the talent. when i was in college, the top of the class at m.i.t. was always taiwanese. they were half a dozen in the top 10. they have the talent. they have the money. and they have the geopolitical impetus. if we don't stay ahead on this we could be obliterated.

i think the geopolitical cards are still in play and when not get worse, but on the other hand, not any better. anchor: jim, if were talking about the geopolitical cards and play right now, from your perspective, how is this race playing out between countries for technological supremacy, independence, especially when it comes to semiconductors? jim: this is one on the chessboard. it is an important piece. technology is an important part of our lives. i can't help but think, while, -- wow, two years to correct that, that is a short time in geopolitics. were talking about things that unfolds over decades like the u.s.-china relationship. there is bound to be an oversupply 24 months down the

road. when everybody rushes in to correct the supply and balance, it what saws -- imbalance, it whipsaws the other side, so i imagine we will be having a conversation about oversupply and depressed prices and the problems that result from that. how that plays out geopolitically, we will see. it is a short-term issue as it relates to the politics. anchor: june park, when it comes to ramping up production, the reality is it is still going to take time, but when it does happen and orders are placed, it still could take several more months for those to be delivered, right? june park: that is correct. say someone decides to build a factory with $17 billion that it

made during the u.s.-rok summit in may, or when taiwan finally expands the boundaries within the u.s., they have pledged six different places, including arizona, was 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 the huawei ban or not. we are expecting to see a huge, huge production amount coming from the united states. plus, with the innovation tribe that the u.s. is pledging for itself, i think there will be a huge, significant change on the landscape of the semiconductor industry. then what would be interesting to see is how europe responds to

this. the contactless economy will accelerate even during or post-pandemic, during the post-pandemic periods, the need, the demand for chips is not going away. it would only be expanded, and the digital economy will continue to expand as well. anchor: june dreyer, you mentioned rare earth elements in your previous answer. i wanted to bring that up. you wrote a piece last year analyzing china's monopoly on rare earth elements. how does that play into the semi conductor industry concerns going forward? june dreyer: it plays into china's whole of government and whole of society attack, and it is a well coordinated one. no matter whether you are

pro-were anti-china or meh -china, you have to admit they have played their hand brilliantly. rare earth are mostly silica and, hence -- silicon, and for many that is not a rare earth, but the same kinds of techniques are seen when china decides to do something. it decides to do it in a very coordinated way, and this is a coordinated way. the problem with democracies in general, and this is a bigger problem for the eu because they have so many democracies with different interests, is coordination. i have been told a foundry costs between $10 billion and $12 billion to make, depending on what kind of chip you want to produce, and after you make it,

it would take at least five years to become profitable, so in other words, government support is necessary. now china has the type of government willing to support that. joe biden he is willing to support that. it is harder, obviously, because of the way our economy is structured with a lot of private input, and in the case of the eu, really hard, because even though the french, germans, and british, which aren't in the eu anymore, pretend to be friendly, the national rivalries are still there. anchor: june park, i so you react to what she was saying, so i wanted to get your reaction, but ask you, is there a lot of concern that china's hold on the rare earth elements sector is so strong that it could be used against everyone else?

june park: for the rare earth elements, i would think there have been previous cases in the wto for china because china withheld them when there was a clash between japan and china over the islands. that kind of precedent leads me to believe in subsequent years was 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 earths as ones that u.s. will be fixated on in the coming years, but it is not really exercised as a ban in the form of the let's say huawei ban, so we

would likely see a policy mechanism to secure some of the rare earth elements, especially coming from africa, because china already possesses a huge, huge sum of the rare earths discoverable in africa, so there may be infighting amongst countries in need of the rare earths. anchor: jim, this dependency on taiwan when it comes to semiconductors, how worrying is that when it comes to western countries? jim: semiconductors and technology in general, especially in a place where china has ambitions, that elevates the concern. from that geopolitical perspective, think in terms of decades, not one or two years, but it illustrates the dynamics that can play out, and the importance of these technology

issues, especially in the sector of $10 billion to $12 billion, that is a government-lit investment. it is difficult for companies to make the investment with payback without some form of government subsidy. as stated, in a democracy, it is hard to do that, compared to an authoritarian state. there is a high degree of concern about this dependency. i'm not sure the acute concern is there. i have not heard people saying we will not get the military hardware we need, but it would take you longer to get your cell phone or playstation, but is a concern, but more so than where it could go today. anchor: in terms of competition, how far ahead are the taiwanese? june dreyer: they have amazing

talent. they have an efficient education system. you don't have to persuade -- it is not like the u.s. where we almost have to bribe students into stem study programs. they are eager and willing. and so, i think, and they understand critically that this is important to the future as an independent, sovereign state, so i think they will be able to maintain that momentum. now there have been problems. one taiwan company, macron, -- micromm an employee, was found guilt of selling secrets to chinan, -- micron,, an employee was found guilty of selling secrets to china. so it is not perfect, but they have the momentum and the will to stay ahead, so i think they

probably will. anchor: june park, aside from everything else we have discussed in the program today, i want to talk about the covid-19 outbreak in taiwan. did that further disrupt the semiconductor industry? and how much concern that will make things worse, at least in the short term? june park: i think within taiwan there may be increased cases, compared to the previous months than taiwan has experienced, but taiwan has modeled a good example case of a covid-19 pandemic recovery process, and i think that with vaccination provided by the u.s., taiwan received moderna vaccines, and within several months, i think taiwan would be able to recover from its current phase, and

possibly into a more rapid phase into recovery. anchor: all right, we have run out of time, so we will have to leave our conversation there. thank you to our guests. and thank you for watching. you can see this in our previous program any time by visiting our website, al jazeera.com, and for more conversation on her facebook page. you can also join the conversation on twitter. for me and the whole team here, by for now -- bye for now. ♪ ♪ c?c?c?c?aew■x.ççççñçñçñ [captions made possible by kcet

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