Last week, amid the personal, geo-political, and humanitarian disasters caused by Russia’s brutal invasion of Ukraine, it also dawned on the tech world that between forty and seventy percent of the world’s pure neon gas [depending on which source is reporting] has been refined and provided by Ukraine. We can certainly do without any more garish neon signs, but nearly perfectly neon is required for the production and manufacture of the majority of computer chips, and it takes time to build and get into operation a plant that can provide the 99.9% pure neon required for high-tech uses..
Most chip manufacturers appear to have between three to eight weeks supply of neon, but some have less than that. China also has neon, likely enough for its needs, and Linde built a neon plant in Texas in 2016, but some chip-makers will soon exhaust their supplies, and that means another chip shortage in the months ahead.
Outsourcing and offshore manufacturing to get the cheapest costs is based on the assumption that trade patterns remain stable and reliable, and that all nations value economic stability over military objectives, but Putin’s attack on Ukraine illustrates the dangers of national and industrial policy based on that assumption.
And this doesn’t even take into account that Ukraine also supplies the majority of wheat and vegetable oil for countries like Egypt, where shortages could also result in hardships and socio-political unrest.
So long as the world contains nation-state powers that can disrupt trade and supply lines, it’s foolhardy not to have critical reserve capabilities. So…in effect, to maintain a stable industrial economy, the U.S. either needs to maintain overwhelming military power and considerable economic power to keep rogue regimes in line or an industrial policy and programs to insulate our manufacturing and wholesale production economy from supply interruptions.
Right now, it appears that we’re not doing that well on either front, largely because politicians won’t or can’t address either and because too many of the giant corporations don’t want to do anything that adversely affects their immediate profitability in the slightest… and because too many Americans fail to understand that cheaper at all costs is seldom better in the long run.
But, hey, who cares about the long run (at least enough to really do anything about it)?