Omicron threatens supply chains + Chip shortage in the auto sector

Wherever Omicron spreads, severe consequences for global supply chains follow. This is what Wan-Hsin Liu from IfW Kiel explains in today’s interview with Finn Mayer-Kuckuk. The situation will become especially dire if the highly contagious virus variant were to actually gain a foothold in China. Almost two-thirds of the world’s intermediates now come from the People’s Republic, the economist said. Lockdowns are already happening so abruptly that companies can’t possibly prepare for them. For the Communist Party, the balancing act between growth and virus containment is critical to its survival. If one fails, the country’s political stability is at risk.

The supply of semiconductors is also vital for the Chinese economy at the moment. The country still cannot produce chips that match the quality produced in Taiwan or the USA. As confident as ever, China has set the goal of producing 17.4 percent of the global semiconductor volume by 2024. Shanghai serves as the testing ground for this ambitious goal. The entire value chain for Chinese computer chips will soon be centered in the 26 million metropolis. The local government is offering generous subsidies for factories and housing allowances for skilled labor. However, as Christian Domke-Seidel writes in his analysis, the technological gap cannot be closed in only a few months. Quantity is not quality.

Meanwhile, Chinese telecommunications equipment supplier Huawei has filed a complaint against Sweden. The Scandinavian country had excluded Huawei from expanding its domestic 5G network. Huawei is not willing to give up that easily. If the Shenzhen-based company wins in court, it could set a precedent, as Nico Beckert and Falk Steiner write in today’s feature. However, it could take years before a decision is reached.

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Fabian Peltsch