Chips with everything…

Did you know that what’s printed on the tubs of butter you buy at the supermarket relies on microchips to control the curing of the ink? You probably didn’t, but it’s true.  It’s a simple example that there’s ‘chips with everything’ in today’s world. While media headlines concentrate on how the global computer chip shortage impacts things like games consoles, cars, and smartphones, it’s worth remembering that the shortage has a much broader impact.   

It’s easy to believe that current supply woes are wholly caused by the pandemic, but that’s not the case, as many articles analysing the causes illustrate, see here and here , for example. US-China trade tensions are a factor, for example, and so are the decisions made by major corporates in some industry sectors when the pandemic hit.  On the latter, many swiftly cancelled orders with chip suppliers who understandably compensated by prioritising sectors where orders continued to flow. As current delays to new vehicle production in the auto industry illustrates, many companies now find themselves further down their supplier’s priority lists than they perhaps expected now that things are slowly opening up.   

The pandemic has, of course, had some direct impact, but rational and objective observers will conclude that the event has starkly exposed a serious consequence of the globalisation and extended supply chains that have become the norm over the last twenty or so years.  Over just two decades the number of key semiconductor fabrication companies has essentially reduced to just three, namely Taiwan’s TSMC, South Korea’s Samsung, and Intel. When the two Asian firms have more than 70% of the fabrication market from facilities centred in the Far East then we shouldn’t really be surprised when a disruptive event puts the supply/demand equation out of balance. There’s little doubt that many country leaders, politicians, and corporates will already be considering whether the developed world’s heavy dependence on globalised supply chains has gone too far. Global trade’s important, and it has been for centuries, but it seems likely that there’ll be some strategic retrenchment towards a better local/offshore balance in order to mitigate strategic risks over the coming years.

For years we’ve been told by health professionals that eating chips (fries) with everything isn’t healthy, and most people in developed economies are more informed today about the importance of a healthy diet than previous generations. Analogously, we need to appreciate that a life regimen that relies on ‘chips with everything’ for the goods, devices, appliances, and facilities we use every day in the modern world isn’t good for us either. Chips as part of a balanced diet or in a balanced every day life are, of course, perfectly acceptable, and so perhaps a shortage of computer chips isn’t such a bad thing if it helps us return to a better balance in the way we live.   

‘We are all doomed!’… No we are not…

This blog item – the 100th since the blog’s inception – arose from a conversation with someone grumbling about their employer offshoring software development and IT support to India. They used the phrase ‘We are all doomed!’ from the UK Dads Army TV series and ignored the Badger’s ‘No we are not’ riposte.

The Badger remembers ‘We are all doomed!’ being frequent refrain of UK IT staff in coffee-point discussions during the surge of offshoring to India in the early part of this century. UK IT staff were initially sceptical and dismissive of the capabilities in India, and hence reluctant to move work offshore. Offshoring, however, was a necessity driven by market forces and staff eventually realised that ‘No we are not’ was the right riposte to ‘We are all doomed!’. Today, globalised IT work is a norm. The Badger was part of this journey because ~20 years ago he helped to acquire a small software company in Bangalore and then monitored it proudly as it blossomed into a very large, successful, global IT delivery centre.

That small Bangalore company was full of young Indian staff who were hungry to learn and succeed. It was clear from the outset that they would flourish after being acquired because they had an impressive commitment and attitude that contrasted markedly with an ‘entitlement culture’ evident in some UK youngsters at the time. Today, however, things seem different.  Based on the number of UK millennials who want to work hard, learn, acquire skills, and be successful that the Badger meets, that ‘entitlement culture’ appears to have waned. Coupled with advancing technology and changing geo-political environments,  perhaps we’ll see some retrenchment of offshoring and IT globalisation in the future.

The Badger thinks that ‘We are all doomed!’ has also become an unspoken undercurrent to matters relating to the potential coronavirus pandemic in recent weeks, especially in social and broadcast media and the press which seem to have erupted with a questionable mix of instant opinion, misinformation, grumbles, individual experiences, and comments on country responses. Even stock markets have taken flight, ostensibly because – surprise, surprise – no one can predict the future. The Badger takes the hopefully rational view that we are definitely not doomed! Why would we be when we have overcome challenges from ‘The Millennium Bug’, SARS, Swine Flu, Bird Flu, and Ebola in the last 20 years?

The Badger does feel, however, that coronavirus is the starkest reminder yet of the downside risks of the relentless march of globalisation. Perhaps this combined with climate change will mark a turning point for globalisation? Time will tell.

Finally, just remember that humans are excellent creative problem solvers, so if someone suggests ‘We are all doomed!’ just say ‘No we are not’. Then playfully ask their view on what would happen if social media, global communication, and internet services collapsed. They’ll look you in the eye and scream ‘We are all doomed!’ much, much louder…