“Now that the automotive sector and others are catching up and starting to reclaim the capacity they had given up, there is fierce competition for semiconductor supplies.
Accenture’s Global Semiconductor Lead Syed Alem says, “smartphone companies benefited from the extra capacity left behind by automotive businesses, which led the automotive sector to experience a chip shortage when demand for cars rose faster than they anticipated." However, the auto industry and others are catching up. Smartphone manufacturers like Samsung and Apple dodged the initial bullet of the microchip shortage, having seen what was coming a lot sooner than the automotive industry - although some issues are still arising. On top of that, chip manufacturers are increasing their prices to prevent over-ordering - and whether that influences the price of smartphones next year remains to be seen. The latest data shows smartphone sales have fallen 6% year-on-year, and this is because production has stalled, and in some cases, halted. Xiaomi, meanwhile, said its smartphones would see a price increase because of the global chip shortage.Īpple’s MacBook and iPad products have also encountered production issues, and in March, Samsung announced its new Galaxy Note would indefinitely delayed. For instance, Hon Hai Precision Industry, an Apple supplier, said about 10% of its shipments would be affected. Production in countries such as Vietnam, the Philippines, and Malaysia was halted due to the outbreak, but US automakers rely heavily on those countries to keep their production lines moving since home-grown fabs only account for 12.5% of chip manufacturing.Īnother suffering industry is consumer electronics manufacturing. A new outbreak of Covid in South East Asia, where most US automakers’ chip manufacturing is done, could hit the industry even harder next year. What industries are most affected?Īutomakers have been practically immobilized for over a year, and the situation might get worse. Taiwan makes up over 60% of the world’s total global chip foundry revenue and the country wasn’t able to keep up its usual output. The world’s largest chip manufacturer, TSMC, also had to cut back its water usage (fundamental to the production of chips) due to government orders. Power outages in Texas, where the majority of the United States’ chip manufacturing is done, and drought in Taiwan, also contributed to the shortage. There are also molten metal and lasers involved, as you’re taking a silicon wafer and turning it into a transistor to power your computer, smartphone or other smart device.įinally, multiple factors outside of the semiconductor industry’s control also played a part. Making a chip from start to finish takes about three months and involves million-dollar machines. And if you’re off by a fraction in the process, you’ll most likely lose out to another manufacturer. Whether it’s easy or hard to build a semiconductor, the fact is the process takes billions of dollars and a lot of time. So making silicon chips isn’t easy, but the people who do it are talented and backed by excellent resources. In a room where a semiconductor is built, they only allow 10 for every cubic meter. In an operating room, they allow 10,000 particles of air pollution for one cubic meter of air. The process is so delicate that the rooms where semiconductors are built are cleaner than hospital operating rooms. What other factors contributed to the global chip shortage?Ī number of other underlying factors also contributed to the chip shortage, with the complexity of items such as semiconductors also a significant factor.Īccording to Craig Barrett, former boss at Intel, the company’s microprocessors are the most complicated devices ever made by man.
Smartphones remain the most popular electronic commodity in the world, so demand remained high, and crypto enthusiasts and entrepreneurs snatched up graphics processing units ( GPUs). Pretty much anything that has a battery or plugs into a wall uses chip-based technology.įor example, the demand for cloud computing services went through the roof as many consumers started purchasing products they typically wouldn’t need to work from home – with many businesses doing the same. It’s no surprise that the pandemic lockdowns had a role in the silicon shortage, but it also affected other areas.
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