President Biden should care that no one can find the new PS5 or Xbox President Biden should care that no one can find the new PS5 or Xbox
I don’t know what you think of when you read the word “microchip” or “semiconductor,” but I think of the Cold War. In particular,... President Biden should care that no one can find the new PS5 or Xbox

I don’t know what you think of when you read the word “microchip” or “semiconductor,” but I think of the Cold War. In particular, I think of the microchips inside of the early guided missiles. Like author Stephen D. Bryen explains in his book Technology Security and National Power: Winners and Losers, the United States pulled ahead during the Cold War in part because  that is the country that manufactured microchips. And the USSR had no hope of replicating the complex processes that go into the fabrication of semiconductors. And that’s why President Biden should care that you and I are having a hard time finding the PlayStation 5 and Xbox Series X/S.

Video games are frivolous entertainment, but they’ve also proven indispensable to many families and individuals throughout the pandemic. But the U.S. government doesn’t necessarily need to concern itself with console availability because people like the hobby. Instead, the issue is that the demand for consoles, GPUs, and CPUs creates demand for microprocessors that is disrupting huge segments of the economy.

Analysts told Washington Post that they expect vehicle manufacturers to produce between 1.5 million to 5 million fewer automobiles this year due to the dearth of chips. This led Ford to cut production of its F-150 pickup, which is the best-selling car in the U.S.

AMD, Microsoft, Sony, and Nvidia have also all pointed to the supply constraints on processors as the primary reason they cannot meet demand for PS5, Xbox Series X, and more.

Manufacturing capacity is at its limit

The underlying problem is a lack of capacity at the fabrication facilities. Silicon is in everything, so manufacturers have booked every single production line. This generates multiple problems.

For consoles and PC components, it creates a log jam. The PS5, Xbox Series X/S, AMD Ryzen CPU, and Radeon GPUs all run on processors using Taiwan Semiconductor Manufacturing Company’s (TSMC) 7nm fabricating process. If TSMC wants to shift production to AMD, it would have to shift it away from Microsoft, Sony, or another customer.

The other option for TSMC is to retrofit its other facilities to shift from producing older processors to newer products. And it has done that at the expense of the auto industry.

When demand for vehicles dropped early in the pandemic, semiconductor companies spent the millions of dollars to reallocate their capacity toward more profitable processors with higher demand. Auto sales rebounded in the second half of 2020, but TSMC and others couldn’t flip a switch to start producing those chips again.

It’s a zero-sum game. So what should Biden do about it?

The U.S. should treat semiconductors like it treats weapons

Last week, President Biden signed an executive order to review the supply chain for chips. He did this at the urging of a bipartisan group of congress members. And while we know the Democratic party loves their studies and reviews, they’re less great about doing anything with the findings.

An honest review of the supply chain should make both parties want to act. Sure, semiconductors are crucial to cars and consoles, but they’re also integral to medical equipment and military weapons.

And weapons is probably the correct way to think about processors. If so much of our economy and security depends on access to these components, shouldn’t the country have reliable and resilient semiconductor supply chain? Wouldn’t the money the country spent on the failed F-35 serve us better if it ensured a secure and ready supply to such an important piece of technology?

“All made in Taiwan”

Instead, what we have is near total reliance on Taiwan’s TSMC. This is something Biden has already made moves to address. The President’s top economic adviser Brian Deese sent a letter to Taiwan’s economic minister explaining a desire to improve production.

“We see significant potential for broader engagement over the medium-to-longer term to enhance supply chain resilience,” Deese wrote in the letter, as first reported by Bloomberg News. “We also look forward to working closely with you on the broader U.S.-Taiwan economic relationship.”

Taiwan has an excellent trade relationship with the United States and other global partners. But the country also has a fraught relationship with its neighbor China.

And the point is that we don’t have to imagine some politically unstable future for Taiwan.

Semiconductors are important now, and the world cannot produce enough of them now. And why? Because demand for entertainment and personal-computing hardware is too high. That alone is absurd and frightening and should motivate America to invest in the future of integrated circuits.

Of course, even an immediate move to fund fabrication in the United States wouldn’t help immediately. It will take years to spin up a project of that magnitude. In the meantime, it’s unlikely that you’re going find a PlayStation 5 or Xbox Series X sitting on a shelf at any point this year.


GamesBeat’s creed when covering the game industry is “where passion meets business.” What does this mean? We want to tell you how the news matters to you — not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it.

How will you do that? Membership includes access to:

  • Newsletters, such as DeanBeat
  • The wonderful, educational, and fun speakers at our events
  • Networking opportunities
  • Special members-only interviews, chats, and “open office” events with GamesBeat staff
  • Chatting with community members, GamesBeat staff, and other guests in our Discord
  • And maybe even a fun prize or two
  • Introductions to like-minded parties

Become a member

Source link