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Opinion
Tim Culpan

A New Normal Is Dividing the Global Chip Industry

Greater uncertainty means higher inventories, but it’s not shaking out equally among semiconductor manufacturers. No surprise, TSMC is beating the rest.

A GlobalFoundries semiconductor manufacturing facility in Malta, New York.

A GlobalFoundries semiconductor manufacturing facility in Malta, New York.

Photographer: Adam Glanzman/Bloomberg

Semiconductor stockpiles are at a record high, and a global economic downturn is unlikely to change that picture. But an increasingly tense geopolitical environment and continued supply chain friction is dividing the largest from other semiconductor manufacturers, which could impact how well they survive.

The technology Cold War between the US and China that gained steam under the Trump administration and was exacerbated by the pandemic has reset expectations for how much product should be kept on the shelves. The global shortage of some chips peaked in 2021 after clients that included carmakers cut orders only to desperately need them a few months later. At the same time, the popularity of streaming video services such as Netflix Inc., which were forced to expand their server capacity, and greater use of gadgets from companies like Sony Group Corp. created competition for limited manufacturing capacity.