Semiconductor chips are used in a growing number of products we use every day, from automobiles to flashlights. The shortage has affected a broad range of businesses and has delayed or restricted supplies of electronic products worldwide.
Production has not been affected much in the smartphone industry because the leading manufacturers have been stockpiling components. Still, for consumers who use their smartphones to play in their favorite Online Casino, that’s all starting to change as manufacturers are now beginning to feel the effects of the shortage.
At one time, the U.S. produced 37% of the world’s semiconductors. However, as outsourcing to Asia increased, their production fell to just 12% of the overall market.
Some industries, such as the automobile industry, have been hit harder than others. The industry scaled back production during the global pandemic. With demand again increasing, some manufacturers have had to shut down production for weeks at a time because of a shortage of components.
What Is The Cause?
A combination of events led to the global shortage, with the primary reason being the COVID-19 pandemic. The other reasons are said to be the United States-China trade war and the 2021 Taiwan drought. In addition, during the lockdown of 2020, a sharp increase in the demand for computers combined with chip production facilities being shut down led to a significant decrease in the number of chips available. As a result, personal computers saw an increase in sales of 26% at the end of 2020.
Other smaller events further contributed to the shortage. For example, in February of 2021, a severe storm in Austin, TX, closed two semiconductor plants owned by Samsung and NXP, which delayed production by several months.
In addition, fires at two Japanese production facilities in 2020 and 2021 set back their production by several months, along with last month’s fire at a German facility that produces EUV lithography equipment used in the production of semiconductors.
Shortages Already Being Felt
An expansive range of businesses has been affected by the shortage, restricting the supply of televisions and other devices with OLED displays. In addition, video game consoles such as the PS5 and Xbox Series X have stalled shipments, which has made both the devices difficult to find in stores.
Semiconductors in cars make up 15% of the global chip market, with personal electronics accounting for 50%. Auto manufacturers wrongly predicted a drop in sales and canceled chip orders in 2020.
As a result, the industry was immediately unable to meet demand and is by far the worst-hit industry during the shortage. Several major automakers have closed factories and laid-off workers and have significantly reduced production. Experts predict it could be as late as 2023 before chip supplies return to normal.
What’s Being Done?
At the present time, governments are working to build more chip capacity into supply chains. President Joe Biden recently signed an executive order to review the country’s option to strengthen the supply chain of semiconductors. He also met with chip manufacturers and has asked them to provide information on the shortage and also move to the forefront in helping to solve it.
Taiwan’s chip makers are working with and supporting all stakeholders. They have met with the White House about plans to invest more than $100 billion to increase capacity at its facilities over the next three years.
U.S. automaker G.M. plans to source an increased amount of semiconductors directly from manufacturers instead of suppliers to help in the effort to reduce the worldwide shortage. In addition, Intel recently announced that it plans to invest $20 billion to build two new production plants in Arizona.
As the world thinks about recovering from the semiconductor shortage, countries must now think about how to increase chip production to avoid a future shortfall. As this shortage ends, though, another will likely occur, with the demand for electronics growing even more.