Some time ago, you could find a text in our pages in which we discussed the threat coming from China. Then it was about the supply of magnesium, and this time from behind the Great Wall you can hear rumors about semiconductors and the fact that their availability on the global market may soon decrease drastically.
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To better understand the current dependence of world producers on what the government in Beijing has decided, it is worth returning to the aforementioned magnesium for a moment. After all, it is no secret that China is responsible for as much as 85 percent. world production of this metal, and it is not a secret that 35 out of 50 magnesium smelters in the country will be closed by the end of this year alone. Effect? Not only the astronomical prices in the markets, which already reach the level of 14,000 dollars per ton, but also the decreasing availability of Chinese magnesium, which is used by many producers around the world, especially those from the automotive sector.
China favors its companies
The European partners of the Chinese are aware of the seriousness of the situation and are trying to put pressure on them at the highest level. - We are in talks with our Chinese partners in order to find a solution that will remedy the shortages and allow for the development of long-term plans - European Commission spokesman Eric Mamer announced in an interview with „Reuters”. - Failure to solve this problem threatens thousands of companies across Europe, as well as supply chains and - most importantly - millions of jobs. The consequences can therefore be catastrophic - he added.
Behind the Great Wall, no specific decisions have yet been made regarding magnesium, and all indications are that soon the global markets will face another pressing problem.
This time it is about chips, the shortage of which is increasingly visible in the global markets. Due to the energy crisis, the Chinese had to significantly reduce the production of many of their factories and today - when there are simply fewer microcontrollers - they intend to focus on saturating their own market in the first place. This is nothing new, as Beijing has proved several times this year that if there is a problem, it looks towards its own interests. When the energy crisis came and it was necessary to make cuts, foreign producers with plants in China were most at risk. Due to the shortages, all the power was directed to the domestic plants, while the rest had to accept much higher prices. In this case, it did not matter if someone was a giant like Apple or a slightly smaller player.
A geopolitical puzzle
- The whole world is facing very serious problems with microcontrollers - said Richard Chang, a Taiwanese entrepreneur who founded its largest chip manufacturing company, Semicondutor Manufacturing International in 2000. - All this is influenced not only by China's internal problems, but also, and perhaps above all, by political and economic factors related to the sanctions that China and the United States have been throwing about for a long time - he added.
The same will apply to the aforementioned chips, and there is another very important aspect involved, and that is geopolitics. The Chinese have been in the economic cold war with the United States for a long time, and it is no wonder that at a time of huge turmoil in the market they do not rush too much to extend a helping hand to them. This behavior has two meanings - it weakens the greatest rival on the geopolitical chessboard by hitting companies with American origins directly, and also strengthens the Chinese. So we are dealing here with a double blow, the strength of which ricochets over the rest of the world, including, of course, Europe.
The Empire Strikes Back
It is already known that one of the tycoons of the Chinese market when it comes to chip production - Hua Hong Semiconductor, informed its foreign partners that it would not be able to provide them with the same supplies they were used to. Moreover, in addition to restrictions, there is also the risk that China will not take on new orders, putting many manufacturers against the wall.
So the Americans are not going to wait and want to deliver a counterattack. First, Washington has prepared a national chip support plan that will pump nearly 52 billion dollars, reports the „South China Morning Post”. Second, the government called on domestic suppliers of microcontrollers to return their plants to their homeland. One can only wonder if it is not too late a move, taken in the face of a specific threat, and not a detailed analysis of the market and Chinese movements in the geopolitical arena.
