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global learning goto meeting you too. so i was also the upgrade. no problem. like i lose bull supposedly with oh, great on your car run is that there's almost the shipping and logistics are 2 industries that have been booming. ever since the pandemic as the supply chain broke down and none have been more effective than the semiconductor chip industry. these small chips aren't everything these days from planes and national defense systems to your smartphone, your car,

all the way down to your coffee maker. but it looks like relief is just around the corner as analysts believe the chip cycle downturn is nearing. i'm chris vi and you're watching the cost of everything where today we're breaking down how global supply chain disruptions and changes in the chip industry are costing you in a big way. ah, most people don't talk about semi conductors in their everyday life. but these little chips, power everything around you, your phone, your computer, your car, without them. technology comes to a home, which is why the semi conductor value chain is one of the most complex and geographically dispersed processes. what is the cost of supplying semiconductors to the market while the typical cycle take more than a $100.00 days with the chip crossing international borders 70 or more times and ultimately making the equivalent of 3 full trips around the world to fabricate?

as many will recall headlines of chip george's filled the news in 2020 due to supply chain disruptions caused by us trying to trade war and subsequently cove. it billions were invested in to expanding the chip industry and building out foundries . pie one semiconductor manufacturing and samsung electronics announce 3 year global capital expenditure plans in 2021 of approximately a $100000000000.00 each. but building a chip boundary is a far cry from an apartment complex. you watch rise over the summer. these factories that build these chips, they cost between $10.00 to $20000000000.00 and can take 3 to 5 years to build. this is due to the hundreds of steps and the necessity for air time clean rooms and strict temperature controlled as robots transport the way 1st from machine to machine. so optimistically, these new foundry investments would likely begin producing shifts in late 2023 or

early 2024. but well, there still be demand for all these chips then when we still be experiencing a chip shortage by 2024. well, that's hard to say, as the world becomes increasingly reliant on technology, these chips which are basically the brains behind all the modern electronics, will become increasingly more valuable. but with production rising so dramatically from all of these investments around the world into new foundries. does the industry risk over supply and to break this down further, lead to bring in i q, liz, lead a founder and ceo of our wealth management. now how is the chip industry now? and are we still seeing constraints in the chip industry today? yeah, absolutely. we're seeing the constraints due to supply chain issues. we're also seeing inflation affecting it, the capital expenditures that these companies are making are all part and parcel.

these are 5 to 10 year plans for these companies. so that's absolutely nothing due to that. you know, samsung, taiwan semi conducted the leaders in the field tend to be putting more money right now, as you said, between 10 to 20000000000. and that's going to see we're going to see if that's going to pay off within the next 510 years. it's not an overnight, as we talked about before, but the state of the industry in flux inflation of but affecting the prices at the same time. how much of those price going to be going up? and can they get the products to market? you know, chips or anything to, to brushes, to washing machines, cars a lot like they're so used in our life. yes. it's going to be affected by what's going on with inflation. and yes, we're going to see some slow downs, but we only hear that it's going to go out to 2020. and now we have recent checks

with the industry contracts reflecting and accelerating and broadening trend of order. cancellations that actually started in april of this year. so it seems like device makers are increasingly reluctant to take inventory of chips since they can't complete products amid supply chain constraints for other components. so well all those heavy cap ex investments into boundaries pay off or is the industry in force lump? well, the capital expenditures they, these companies knew that they were going to have to do what they're doing these type of investments. they're trying to do forward thinking, going forward anywhere between 3 and 10 years. corporations are looking at, i personally believe that there is, or the or room and plenty of products, even though some companies may hold off. what i see end up happening is that they're going to actually pay more for later. because i want semi conductor intel

samsung, they're all saying they're going to raise the prices. so these companies, either you spend now, or if you're holding off, you're gonna see that later. and it's going to cost you quite a bit more. the semi industry seems to be moving from global collaboration to a more self sufficient strategy with 3 emerging centers of influence. if you will, you have the west of china and japan and korea. so is that a net positive or a net negative for the industry? now that it's become so segregated, well, i can't see this as a net positive at this particular point. would i like to see more countries and more regions get involved in it? yes, but that's not going to happen at this particular point. we have dominant players, we're going to continue to dominate, like you're taiwan, china, and the west. the funny thing is if you're looking at the united states,

united states really doesn't have anywhere where, where your factory chips. a lot of these countries have subsidies as high as 70 percent to build those factories there. so that's why you're starting to see a lot more countries in the east be that john many years like your china and taiwan. so the world are low with korea as well, and i don't see that changing at this particular point. so i can't say it's neutral . i actually thinks a little more negative at this point. and high inflation is also driving the semiconductor industry in reverse. so how exactly does inflation affect the chips industry? yeah, well inflation affects everything. if you think about it, just look at what we've seen recently with gasoline prices going up more than 60 percent in some countries. and although we're seeing that inflation has gone up 9

percent, this particular much the highest, it's ever been in a particular short period of time. we're actually starting to see, we're thinking that that's actually the piece that we're going to start the see the move downward as we had until august inflation, one of the big indicators, inflation is gasoline prices. and those prices for the last 20 days have gone down. every single day. so from the high point that we saw just 20 days ago, it's gone down. we see the same thing happening with the chip. yes, people are going to have to pay more for those products. in some cases, it's gone as high as 40 percent, but at the same time as inflation starts to bait and things start to go down, we're going to see the similar back in the semiconductor area. and things will start to reverting back to normal by 1st quarter 2023. we're also thinking that the

computers are going to be less effective than other areas where chips are a big part of their industry. keyless layer, founder and ceo of laura wealth management. thank you so much for joining us today . ah, now the real cost of semiconductor chips is found in the complexity and their design and manufacturing process, as they're so often made using raw materials like silicon and germanium. along with other pure elements, the production involves adding impurities to the base elements in a process called doping. computer memory integrated circuits and transistors are all built using semi conductors during production, semiconductors are fabricated on single crystal materials. and during this process, molten poly crystal lean semiconductor material is combined with a dope and,

and then a seed crystal is introduced. the crystal is then pull polish and dice into wafers that are polished into a point of being almost completely flat at an atomic level. next is a process known as photo lithography, which uses light to transfer geometric pattern from a photo mask to a photo sensitive chemical. by doing this, the process coats the surface all the way for with a mask that blocks everything not meant to be exposed to u. v. light. once completed, the exposed portion is dissolved which leaves part of the surface, protected, and other portions exposed for etching, which traces the shape of wiring and other components. the entire process establishes a single layer of a circuit. and depending on the complexity of the manufacturing process, there can be up to 1400 process steps in the overall manufacturing of the semiconductor away for a loan. once fabrication is complete,

the semi conductors on the silicon way for must go through assembly testing and packaging. also known as a t p stages of production, which can take an additional 6 weeks to complete past the $14.00 to $20.00 weeks. it takes to manufacture the way for the 1st place. in short, the cost of semiconductor chips is found in its complexity. it's time consuming process and in the very controlled environment in which it is created. when we come back, port congestion is generating again a higher cost for manufacturing. and eventually to you will have more after the break. blue. with the deal, lowest ones are deal

with project with lotion, school know that other little money done. love the schooling with idea that would limit l. look forward to talking to you all that technology should work for people. a

robot must obey the orders given by human beings, except where such short or is it conflict with the 1st law? show your identification. we should be very careful about artificial intelligence. and the point obviously is to great truck rather than fear a very job with artificial intelligence, real summoning with a robot most protective phone existence with what we've got to do is identify the threats that we have. it's crazy, even foundation, let it be an arms race is often very dramatic development only personally, i'm going to resist. i don't see how that strategy will be successful. very

difficult time to sit down and talk with i am, my name is frank. i'm a retired from philadelphia, got in the movement at age 13, going on 14. we were violent towards those people because we believed that were this race were here 1st and this is our country being part of that movement. i got your sense of power. when i felt powerless, we got a pension when i felt invisible and accepted when i talked to level life after, hey, is an organization that was founded by 4 o skin, neo nazi white supremacists in the us in canada. and they found each other and they knew that they wanted to help other guys get out is 2 parts to getting out of a violent extremist group. the 1st part is disengagement, which is where you leave the social group. and then the next part is d. radicalization work belief systems audiology are removed. it was very impactful.

when someone finally came along with no fear, no judgement, you heard my story did nothing to challenge it. validate with, despite the slow down or congestion is growing again as a result of labor and equipment and efficiencies, especially as we enter into peak season. our logistic managers, shanghai, the largest c port in the world is still in the process of reopening manufacturing plants and a hi, have been shut down for 75 days. due to 0, coven restrictions, and even operating a 247 capacity, they still will not be caught up until at least the end of july. meanwhile, in europe, port congestion is worsening as the availability of the containers to be filled

with trade. the situation is compounded with the persistent shortage of truck drivers, as well as a labor strife between trade unions and the seaport. despite the historic volumes of containers, a pullback is expected as future orders. a chinese manufacturing have dropped 20 to 30 percent with marla, state of the port. let's bring in doctor jack rasmus, professor of economics and politics at st. mary's college. so jack, what is the root cause of all of the back? like in these ports, is that simply kelvin? well, i sir, partly called it, but it's, it's more than just covered. of course sir, you know, during, during co read what happened on the porch says that the, you know, a lot on a workers a got laid off the same with the shipping. and then when they tried to reopen, they had a supply chain problem. not just in a porch,

but in the shipping lanes and so forth and unloading the ports, et cetera. so, you know, it was covered and the some extended still is covered in china because of the shut down going on there. but it's not just a totally corridor, we've got other problems now with the inflation and energy shortages are delivery of energy shortages because of what's going on in europe and ukraine, other places, and the sanctions, the so forth. so the supply chain problems and still exist. but the supply chain means not just what's going from port to port over the oceans. it's also do you have a sufficient skilled workers at the ports to be able to unload in all the goods and the, you know, be, do you have available truck truckers to carry the goods from the ports to the you know, inner warehouses night warehouses and from those warehouses to the local warehouses

. well, we've had a shortage of, of labor here in the u. s. a. particularly in a row delivery trucks. 18 wheelers are thus far, we because so darn expensive. now for these a, these truck drivers to wait at these ports and idle there, you know, there, there trucks in order to pick things up. so a lot of them haven't come back to work in other words. and then you have problems in the warehouses the same thing. so the labor markets have been seriously disrupted, not just the, the goods markets, as we would say in economics. and that's part of the problem as, as well. railroad, the employment, the skilled employment and so forth. so it's all that could cover related, but you know, when you, when you get the shortages are engineered because of the sanctions and that adds to the problems a, another layer ah, and the,

what that means is that there's not as much demand for imports or companies can't afford and put off the, you know, their purchases of a so my finished goods for imports in our consumers because of the inflation i can't afford to buy as many goods. so you don't have as much delivered into the port that's exacerbated most in the case of europe, for example. so there's different problems in different parts of the country. you know, whether you're in china, where they are in the u. s, where they are in europe. but in all cases, it means we have a multiple set of problems in the supply chains that still exist. now go go. one of the biggest tech power houses is moving aggressively to support logistics and supply chain operations with its google cloud platform. what do you think of this move and how can google help fix these logistics issues?

well, google can help are making, you know, the movement of goods, the predictor your, the movement of growth more efficient. but that really doesn't resolve the problem on the for example, in the u. s. u, you've got this tremendous know increase in gasoline and fuel prices. that's not going to solve the problem. the truckers can't afford to wait at the ports for 4 hours with their engines idling and pay that extra cost the gas or not and go can do about that. that's an inflation problem. that's an energy cost, energy price problem. and that has a bigger causes than, than just the ports. how do these port congestion and delays affect the consumer? well, the effect that the consumer is, you know, in significant ways. first of all, if you have fewer goods coming into the country than the price of those goods are going to go up. and that means inflation is going to go up, import inflation goes up, drives the whole consumer price index up. and that's contributing to what's going

on as well in the u. s. and you know, and if businesses can't get their goods, they're so my finished goods in or on materials and so forth. and they're not going to invest and expand, you know, they're going to wait and see and not taken aggressive. know, increasing their output and hiring more people on so forth. or they're going to start laying people off, which is they're, you know, just beginning to, to occur there. so it has a big impact on employment and business on g, d, p and as an impact on consumers and spending on, you know, it's part of the general problem we have with, you know, accelerating inflation. the problem is that, you know, with the ports and supply chains, it's really 2 sides of the same coin here. you know, the problem of the points is the problem with, with supply chains. and but that supply chain problem has been exacerbated by

what's going on in global commodities markets. as a result largely the sanctions and what's, what's happening in europe and elsewhere. thank you so much dr. jack rasmus, for your insight. i me, when it comes to the cost of semi conductors with all of the supply chain disruptions around the world, there are very few winners besides the transport companies that are able to charge for their services. companies now have to reject their operations and it's forcing them to question long held beliefs about justin time or traditionally chit production jet works well when there are no disruptions and all the goods arrive just in time. i scheduled. but now, many companies are forced to pivot to just in case or chick production where it is forced to move or use cash on hand to purchase excess inventory. this leads to other costs associated with jack, such as more effective products, ways to space,

extra equipment over time, and simply more storage costs. so how long are we supposed to live with the supply chain disruption, and will it ever be resolved or fixed? unfortunately, a lot of the problems that we have with the supply chain are deeply rooted points of congestion that will take a significant amount of capital expenditure and investment in order to modernize issues like labor shortages. that the dog and lack of truck drivers are going to continue to plague the local economies. i think global for congestion is set to continue until at least early 2023, where the spot rate rates continuing to be elevated. that's our show for today. i'm christy i and i'll see you next time for the cost of everything the

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