What just happened
Long stories short
- Hamas and Israeli officials said they expect a ceasefire within two days.
- The EU agreed to reopen its borders to visitors who have been fully vaccinated against Covid and to those from countries with limited community transmission.
- Lego announced its first LGBTQ+ toy set, a rainbow themed creation titled Everyone Is Awesome.
The great chip shortage
For 14 months the big questions posed to businesses by Covid have been which would thrive, which would go into terminal decline, and how generous governments would be in tiding them over until better times returned. Now that they’re returning there’s a new question: are shortages going to create a long post-Covid hangover, like rationing after World War Two?
The main story is a shortage of microchips. The digital revolution means every manufacturer depends on them, and globalisation means – ironically – that production has become heavily concentrated in one place. Car makers are hurting more than anyone:
- The chip shortage is expected to cost the global car industry $110 billion this year. Ford is redesigning some models to work with more readily available chips and says it’s halving its production of vehicles this quarter. Daimler, GM, VW and Jaguar Land Rover are also having to slow down.
- The loss of production is pushing up prices. Cars were 10 per cent more expensive in April than in March, the biggest monthly rise on record. It accounts for a third of the shock increase in overall US inflation, the highest jump since 2008, according to data released this week.
- As new cars are becoming more expensive, second-hand car prices are rising – by 21 per cent in the US – because, thanks to lockdowns, people are cash-rich and looking to splurge.
Adding chip manufacturing capacity – known as “fabs” – is expensive and takes a long time. “There’s just a big lag between… when a technology is developed and when [a fab] goes into construction and when chips come out”, IBM’s president Jim Whitehurst tells the BBC. “So frankly, we are looking at a couple of years”.
Why do we suddenly need more fabs? One theory is simply that global supply chains have broken down. Another is that US sanctions against manufacturers in China have slowed production there. But most chips are in fact made in Taiwan by a company called TSMC. Its chair, Mark Liu, said: “In March 2020, as Covid paralysed the US, car sales tumbled, leading automakers to cancel their chip orders. So TSMC stopped making them.”
Instead, TSMC began supplying chips to consumer electronics firms, which saw a boom in demand for televisions, gaming consoles, laptops, and smartphones as people were locked down. When governments began easing lockdowns, car sales rebounded but car makers then found themselves in competition for new chips with companies like Apple, which have more money and, it seems, better economic forecasts.
Expect the US to race to rebuild its own chip-making capacity, and TSMC to find its leverage over mainland China works both ways: its biggest customers are just across the water. In the meantime expect more shortage stories. Some will blame global supply chains, others geopolitics. The truth, in most cases, will be the same: industries that didn’t predict or prepare for the pandemic ground to a halt when it came and are now paying the price.
New things technology, science, engineering
Revenge of the nerd
Dominic Cummings, a disgruntled former employee of Boris Johnson, threatened to reveal a “crucial” document ahead of an appearance next week in front of a parliamentary committee investigating Johnson’s handling of the pandemic. In a series of tweets, Cummings said he had the “only copy of a crucial historical document from Covid decision-making”. As well as giving the document to the committee, he suggested he might sell it as a “non-fungible token”, or NFT – a unique saleable asset – through an online auction, and give the cryptocurrency proceeds to a “Covid families charity”. Cummings, whose Twitter banner is a photograph of the physicists John von Neumann and Richard Feyman at Los Alamos, and who makes a lot of noise about understanding science and technology unlike everyone else, can’t both give the document to the committee and sell it as an NFT, which must be the only copy. Chances are he can’t sell the government document at all because laws and regulations prohibit it.
Wealth investment, fairness, prosperity
The New York attorney general’s office joined the Manhattan district attorney in an ongoing fraud investigation into the Trump Organization. The two prosecutors have been running parallel investigations for more than a year, but that of Letitia James, the state AG, was a civil one, which may have resulted in a lawsuit or fines rather than criminal charges. The Manhattan DA, Cyrus Vance, has been investigating whether the former president’s company inflated the values of its properties to obtain favourable loans and lowered them to reduce taxes. It’s unclear precisely how James will help Vance, who already acquired eight-years’ worth of Donald Trump’s tax returns and is pressuring Trump’s long-serving chief financial officer, Allen Weisselberg, to cooperate. But she’s now the third prosecutor pursuing the former president – a district attorney in Georgia is investigating Trump’s attempts to reverse the state’s presidential election outcome. Trump used to decry the investigations as a Democratic witch hunt. It didn’t make them go away.
Our planet environment, natural resources, geopolitics
Here’s another effect of global warming: it’s very likely to put millions of homes at increased risk of subsidence. New data from the British Geological Survey suggests that hotter and drier summers will shrink and crack the ground under houses. The resulting subsidence can increase home insurance premiums and maintenance costs while depressing house prices. It will be particularly bad where clay formations are vulnerable to losing moisture: London, Essex, Kent, and a swathe of land from Oxford up to the Wash. In a medium scenario for future greenhouse gas emissions, the BGS estimates the risk of clay-related subsidence will rise by a third by the end of the decade and triple by 2050. In a high emissions scenario, nearly half of London’s homes will be at increased risk by 2030 and 57 per cent by 2070. The North is safe. Go there.
Belonging identity, society, beliefs, countries
A leaked draft statement seen by the Guardian revealed that the European Council, which is made up of the heads of state or government of all EU countries, will call on Boris Johnson to “respect the principle of non-discrimination among member states and the rights of EU citizens”. The statement reflects growing concern among EU leaders over the British government’s treatment of their nationals. Many have received letters sent in error by the Home Office telling them they risk losing benefits, free healthcare and the right to work in the UK unless they apply for immigration status within weeks. A new body set up under the tortuously negotiated withdrawal agreement to ensure citizens’ rights are upheld after Brexit said it’s “actively considering” statutory action against the Home Office over the difficulties EU nationals face in seeking “settled status”.
The 100-year life health, education, living, public poliCY
Jab, Jab, Jab
The University of Southampton will launch a study in June to understand whether a third dose of Covid vaccine could protect people against new variants. Eight different vaccines – Oxford-AstraZeneca, Pfizer-BioNTech, Valneva, GlaxoSmithKline, Novavax, CureVac, Janssen, and Moderna’s – will be tested on 3,000 people of all ages who had their first dose in December or January. The government-funded study will use current vaccines rather than newer ones updated to deal with variants. The idea is that a third dose might boost antibodies to a point where they can protect against all circulating forms of the virus. Testing is set to go on for a year, a reminder how far from over the Covid nightmare is.
Thanks for reading, and please share this around.
Paul Caruana Galizia
Photographs by Getty Images
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