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May 4, 2021 | Chip Shortage Highlights Destructive Financial Incentives

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

Destructive financial incentives have wasted years of free cash on gimmicks like buybacks to boost share prices rather than productive long-term focused investment.  Then when high leverage implodes, as it always does eventually, the companies look to governments for bailouts.  We need to change course.  This segment offers some insight.

Car companies across the globe have had to idle production and workers because of a shortage of semiconductors, often referred to as microchips or just chips. They’re the tiny operating brains inside just about any modern device, like smartphones, hospital ventilators or fighter jets. The pandemic has sent chip demand soaring unexpectedly, as we bought computers and electronics to work, study, and play from home. But while more and more chips are needed in the U.S., fewer and fewer are manufactured here.

Intel is the biggest American chipmaker. Its most advanced fabrication plant, or fab for short, is located outside Phoenix, Arizona. New CEO, Pat Gelsinger, invited us on a tour to see how incredibly complex the manufacturing process is.

Here is a direct video link.

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May 4th, 2021

Posted In: Juggling Dynamite

One Comment

  • Peter Brimacombe says:

    great article! Lesley Stahl did a great video on the semi-conductor industry. She focuses on productive capacity of a vital component. In contrast to our self-absorbed focus on housing. Buying and selling houses to each other is not going to make us better. The housing market is over-priced – we’re in for a letdown.

    The federal government is pouring money out the door. It needs to invest in semi-conductors. The problem is how to ensure there is lasting value for Canada. Mark Liu is chairman of TSMC, the world’s biggest semi-conductor manufacturer in the world, based in Taiwan. Mark Liu suggests programs to educate people in the semi conductor industry. How much would it cost to set up Masters and PhD courses in universities? What courses? What equipment? Who would the teachers be? Canada would have to pay for them. Why would the graduates stay in Canada?

    Nortel was a high technology company – certainly a world leader – now it’s gone. How about an inventory of Canadian companies in the industry. Let’s start with them.

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