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Global chip shortage wreaks havoc on various industries

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Yahoo Finance’s Julie Hyman, Brian Sozzi, Myles Udland, and Dan Howley discuss the global chip shortage and how it’s impacting different industries.

Video Transcript

- We talked about it a couple times throughout the last few hours, but a global chip shortage pressuring industries obviously from the tech space, but now the auto space really feeling the pinch here. Yahoo Finance tech editor Dan Howley joins us now. For more, Howley, on what we know, and I guess what we also don't know about this chip shortage and how far it goes and who really starts to feel the pain first-- I guess we're seeing it in the auto sector. But when does this result in something like a flagship Apple device getting delayed? And how concerned is the tech industry right now that this is going to drag on?

DAN HOWLEY: Oh, it's already hitting the tech industry. And this is really partially having to do with the pandemic and partially having to do with the US-China trade war. Companies have started stockpiling chips, or were actively stockpiling chips, like Apple. And Huawei was obviously doing that in China. For the auto space, it's an issue. And remember, these are all different semiconductors from different manufacturers. But what it comes down to is, are they making them for each individual industry? And how many can they put out for each individual industry? Because each industry needs its own specialized type of chip.

So for the auto space, obviously it's hitting there hard. We're seeing chip-- sorry-- plants having to idle. And then for the actual tech side of things-- you know, different tech companies looking at Microsoft and Sony here-- they're particularly hit hard with their new consoles because AMD is hit hard with a chip shortage that they're trying to deal with. Nvidia also dealing with chip shortages on their higher end products. And then obviously we're going to continue to see that cascade across the industry. PC makers are having issues already. Smartphone makers are having issues. So this is something that's going to continue for some time forward.

- All right. I guess we don't have Julie Hymen. Howley, I do want to ask a little bit about the dynamics as they relate to kind of like national industrial policy, because we've sort of seen the outlines of that come up a little bit. You know, there was that huge guide that we saw from Taiwan Semiconductor-- I think it was almost a month ago now.

And there's been this sort of sense of, does the US need to be shoring up its own domestic production of semiconductors? And is that even feasible at this point kind of in the industrial process? I mean, is this a new-- I guess a new era, we could say, for big tech, where we're not worrying so much about software and apps and all that. But we're trying to actually become an industrial player again.

DAN HOWLEY: Yeah. It's almost like a backtracking to a degree as far as these kinds of processes are made. And you know, they were made in the US at certain points. Intel obviously wants to hold onto their fabrication capabilities. A lot of stockholders were saying that they should just outsource entirely to Taiwan Semiconductor and the like. But Intel said that they wanted to keep moving forward and producing their own chips.

I do think, at some point, we see some kind of movement in the direction that you're talking about, some kind of national assistance program or national kind of program where the chip makers are given certain benefits for producing in-house in the US. I think that's something that obviously an Obama-- sorry, Biden administration-- is talking about, and something that we've kind of had to discuss in the past, as well, as we've seen more offshoring of this.

There's also the issue of precious metals. That could be coming out of China in the future where they may want to hold off on certain defense sectors getting access to precious metals. Those are imported from China a lot. But there's also some in other areas of the world that can be accessed. I think it's going to be an ongoing conversation that the government tends to have. But for now, the immediate issue is these consumer goods and how companies can get more chips to them.

- All right. Yahoo Finance's Dan Howley with a story I know we'll be staying on. But kind of started with the drama around TikTok and Oracle and whatever that nonsense was and now we're talking about a real thing, actually making chips and having rare earth metals kind of held back. We'll see how this all unfolds in the months and years ahead.