When the supply of chips from Taiwan stops, we can’t just offer higher wages to tempt workers to quit their jobs as Uber drivers and come to work in a chip factory. Chip shortages aren’t being driven by workers demanding outrageous wages, quitting their jobs to play video-games and live off their stimmies. Shortages aren’t being driven by an unwillingness of chip companies to offer competitive wages to get workers into their factories. The workers aren’t trained and the factory doesn’t exist.
For decades, US policy-makers have deliberately pursued a strategy of moving “low value-add” industries offshore. The underlying ideology of this move is that if the market doesn’t attribute high valuations to a process or product, then we can safely assume that we can hand off that work to someone else.
But markets have clearly mispriced these “low value-add” activities and products. There’s actually a bigger shortage in the low-end chip market (embedded chips used in cars, appliances, etc) than in the high-end chip market. Not coincidentally, products that integrate low-end chips are experiencing high inflation. These chips may be “low value-add” but they’re definitely not low-value.