Pass the Chips: VW Group Demands More Semiconductors for Europe
DC Bruce on Feb 06, 2021
Once again, the consequences of managing a supply chain solely to optimize cost become evident. China has played this principle to the utmost, as it has become -- one way or another -- the lowest cost producer of all kinds of things. The supply chain cost optimizers shift to Chinese supply, and other supply dries up. And then . . . I'm not saying that this is the case with chips and China . . . not yet. But it will be unless the pencil-heads figure out how to add a value for supply chain diversity into their spreadsheets. As the sole-sourced products become increasingly sophisticated, it becomes increasingly difficult to develop alternate supply quickly. It's not like inventing fracking to break the mid-east petroleum monopoly. Back in the antediluvian days, that was the reason for vertical integration. It minimized the risk of supply chain disruption, but it was not the most cost-effective.
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