The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Profit System Caused Chip Shortage

Aug 29, 2022

On August 9, President Biden signed the CHIPS And Science Act, hinting that it would solve the computer chip shortage.

It won’t.

The shortage that’s holding back industries like automobiles and washing machines is a shortage of very old-tech chips of 90 and 45 nanometer, from very old-tech factories, which are about seven generations ago in the chip development world. These are slow, basic, very cheap chips. They are suitable for basic chores like car key fobs, or cheaper consumer electronics like basic laptops and doorbells with video cameras.

The new 280-billion-dollar handouts to the computer chip industry will go for plants making the newest, fastest, most expensive, most profitable, two-nanometer and smaller chips. No company will build a new plant to make very old low-profit chips. The CEO of Intel told a German conference last year: “I’ll make them as many Intel 16 (nanometer) chips as they want.” No shortage of the more up-to-date chips!

This public money will also go for research to be given to chip companies to make their next, even faster, generations of chips. The superfast chips will help out the military, the artificial intelligence industry, and the financial speculators who rely on the fastest circuits available to move their millions of dollars around in split seconds.

But for the consumer waiting for a car or a washing machine, no help at all. The companies simply drafted their politician friends to use the cover of a “chip shortage” to help fund their most advanced projects.

These projects do cost a lot of money. A two-nanometer chip factory runs about 20 billion dollars. The equipment is incredibly complicated and expensive. But the biggest companies have long since accumulated many times that amount in profits … and then given those profits to shareholders.

The ten largest chip makers have given over 160 billion dollars to shareholders in stock buybacks since 2010. One company, Intel, bought back 80 billion in stock buybacks since then.

No, the industry doesn’t need the money. And claiming that the new plants will help consumers today is just smoke and mirrors. But isn’t that what corporate-owned politicians are good for?