The impact of chip shortage on enterprise development

Abstract

Beginning in the third quarter of 2020, the "chip shortage" quickly swept the entire manufacturing industry and spread to the global market. The chip shortage had become a popular topic. I believe that there are three main reasons for the "chip shortage": COVID-19, Geopolitics, and Digital Transformation. In order to analyze the start and end times of chip shortage and its impact on the industry, it is necessary to select companies related to chips in the business nature or supply chain as research objects. There are two important parts to the search of enterprises affected by chip shortage. One is to determine which public information of the enterprise to search for chip related descriptions; Secondly, it is necessary to define the retrieval method. This thesis studied the impact of the chip shortage that started in the third quarter of 2020 on the development of enterprises by combining case analysis with statistical analysis. Specifically, the empirical research focuses on the following three important issues. 1. The impact of chip shortage on enterprise development. 2. The impact of chip shortage on industry structure and development Using the DID method and quarterly data from all US listed companies from 2017 to 2022, it first estimated the efforts of chip shortages on a rich range of firm performance measures for chip suppliers and purchasers. It has found that the chip shortage crisis has led to a significant increase in sales, revenue, and net income for suppliers and purchasers, but the efforts on purchasers are relatively small. The shortage of chips has significantly increased the profitability, market valuation, and investment of suppliers, while the impacts on purchasers are mostly insignificant. Then the influences of chip shortage on industrial structure was investigated. The results indicate that chip shortages have a crowding out effect on small firms, with a more concentrated market and less entry for chip suppliers. Finally, the thesis also employed a DDD method and subsample analysis to explore the heterogeneous effects of firm size and different types of suppliers.