Chips Ahoy!

Welcome back to The Supply Times, your one-stop shop for supply chain news and workforce trends!

This week, we’ve got big updates on the US-China chip wars, as well as a LOT of data on how picking the right company can set you up for success. Plus, I’ll share some great resources on what I’m reading, watching, listening to, and thinking about.

Let’s dig in.

Industry Highlights: US Chipping Away at China

I know I’ve addressed the ongoing chip wars with China several times over the last few months, but the geopolitical consequences of this battle cannot be overstated.

Why am I still talking about this?

For decades, the US has largely ignored the production of semiconductors. Rather than invest in the manufacturing of their own microchips, companies outsourced their production—mostly to the Taiwan Semiconductor Manufacturing Company. TSMC now accounts for a whopping 92 percent of the world’s advanced semiconductor production capability. If you drive a car, own an iPhone, or watch television, chances are it’s powered by a TSMC-produced microchip.

These little silicon marvels ALSO happen to run some pretty important things—like medical equipment and the missiles the military uses to defend our country.

Outsourcing to TSMC was a smart financial decision at first, but there’s now a bit of a problem: China is threatening military action to gain control over Taiwan. And if that happens, it would probably mean that the supply of semiconductors we so desperately need to keep things running would stop.

In an effort to hedge against this potential outcome, the US is doing everything it can to ramp up its own semiconductor production. Congress passed the CHIPS and Science Act in July, pledging $53 billion toward US manufacturing. Intel has plans to drop $20 billion on two factories in Ohio, Micron is moving toward building a $100 billion factory in New York, and Samsung announced a $17 billion factory in Texas.

The most recent salvo came earlier this month, when the US blocked the sale of advanced semiconductors to Chinese firms and restricted both US companies and citizens from aiding Chinese chip development. These regulations resulted in mass layoffs of American tech engineers working for Chinese chipmakers such as Yangtze Memory Technologies Corp, Financial Times reported.

Some see the aggressive move as a huge blow to China, whose plans in recent years have been to hold all the chips (womp womp). “This is a painful blow to [China’s] ambitions to rival the US, delivered at the very moment when [it] reached the pinnacle of political influence,” wrote Michael Schuman in The Atlantic. 

But other experts say it might be too little, too late. A BCG x SIA joint report found the cost of reshoring all US semiconductor needs—roughly 45% of the world’s supply—would cost around $1 trillion, plus $45-$125 billion a year thereafter. And at the rate semiconductor tech is advancing, by the time the US plants are up and running, it’s likely the facilities will be outdated.

Whichever way it goes, it’s sure to be historic. Former Treasury Secretary Larry Summers told Bloomberg that historians would look back on the new restrictions as the most monumental event of 2022. “That’s a really seismic change in policy,” Summers said. “When it becomes an objective of the US to slow the growth in a quite-general way of another country.”

The Future of Work: Choose Carefully to Get Ahead

Want to get ahead in the business world? According to a GIANT new study from think-tank Burning Glass Institute, picking the right company has a lot to do with it—possibly even more than higher education.

The company spent five years studying career mobility for millions of US workers, and it discovered that certain companies excel at helping their employees grow, while others encourage stagnation—even within the same industry.

“Getting ahead, the study concludes, is largely a matter of picking the right company,” a Wall Street Journal article on the study reported.

Why is this such a big deal? As the economic outlook becomes fuzzier and companies hedge against it by slowing hiring rates, landing at firms that offer the most upward mobility could become more important. This is especially true of Americans without college degrees whose skill sets still make them eligible for high-paying jobs.

Furthermore, other studies suggest that many entry-level jobs are dead-end. A Harvard Business School survey of more than 1,000 low-wage workers found that despite lip service to the contrary, most workers don’t get the necessary support they need to grow—things like mentorship, training, and career guidance.

According to the study, here are the top 10 companies for economic and job opportunity:

Not surprisingly, the industry that performed best in terms of mobility was retail, which by default has many more rungs on its ladder. Retailers that scored the best were Gap, Nordstrom, and Macy’s, as well as AT&T and Verizon, which have large retail operations.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About RE: Supply Chain, Work, and Beyond

📕 Read: I’ve been waiting to see what Scott Galloway’s next book would be and it was finally released. It’s called, Adrift: America in 100 Charts, and it’s a good read. If you’ve followed The Supply Times for any length, you’ll recognize my Chart of the Week as a Galloway production. I love this book because it talks about everything—from labor to relationships, productivity to politics. He’s been called the Howard Stern of the business world, and I like his sharp candor. Plus, Elon Musk once called him an “insufferable numbskull,” so he must be doing something right.

 📺 Watch: As a long time fan of Chris Wallace on Fox News Sunday, I was curious about his new home on CNN, and (HBO Max). Who’s Talking to Chris Wallace is a great discussion-format show where Wallace interviews an eclectic group of guests—Justice Stephen Breyer, Shania Twain, and A Rod. I’m especially looking forward to the episodes with Mark Cuban and George Clooney. Those should be entertaining.

👂 Listen: In case there were some who weren't aware, Al Gore didn’t invent the internet, and Mark Zuckerberg didn’t invent the Metaverse. So to learn more about this world, check out this informative Wall Street Journal podcast series called “How To Build a Metaverse” as it discusses the true origins of the Metaverse, including a little known company who built a 3-D virtual world nearly two decades ago. A great 4-part series on how we got here and where we’re (virtually) headed.

💡 Think: I make no apologies for taking a keen interest in our country’s politics and more importantly, our state of politics. As an avowed Independent, I find the growing polarization between our two parties to be troublesome to say the least. According to Gallup, 42% of Americans identify as I’s instead of R’s or D’s when it comes to voting. Even though that is a plurality and not a majority, it should be enough to help drive moderation. Instead, we have voices on the fringes of both sides crowing the loudest and drowning out the sensible moderates. While it’s normal for the opposition party to do well in the midterms, the way it will transpire come November 8th will be interesting. While the House is expected to go Red, all eyes are on the Senate. According to pundits, we’re headed for a change in control in that chamber as well. One of my favorite independent newsletters that provides keen reporting is called Wide World of News, and it’s written by Mark Halperin. Definitely worth a read for those interested in an impartial and objective look. Check it out here. 

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