Microchips and the global supply chain

Yes, the global microchip shortage is COVID-19’s fault. No, it won’t end any time soon.

The manufacturing world is facing one of its greatest challenges in years — a global shortage of semiconductors — and there doesn’t appear to be an end in sight any time soon.

According to Acer, one of the world’s largest laptop manufacturers, companies will still be affected by this shortage until at least the first half of 2022. Semiconductors are an essential component of electronic devices, found in everything from cars and factory machinery to dishwashers and mobile phones. They harness the conducting properties of semiconductor materials (such as silicon), through the use of electric or magnetic fields, light, heat, or mechanical deformation, to control the electric current flowing into a device.

Like many current global challenges, this shortage initially began as a result of the COVID-19 pandemic. Staff at semiconductor foundries in China and around the world were unable to go to work, plants were closed, and production halted, which led to a lack of supply. The movement of that supply was also slowed down by tighter restrictions at ports and international borders.

At the same time, employees started working from home, children and students started studying from home, and many of us were confined to our homes for long periods. New equipment was needed to support these changes, establish makeshift offices and classrooms in our homes, and upgrade our existing home entertainment options. This prompted a sudden increase in demand for many of the devices that rely on semiconductors.

Even before this crisis, the demand for semiconductors was growing steadily, as products continue to become more sophisticated and technologies such as 5G and the internet of things become ever more integrated into our world. The only realistic solution is to increase the supply of semiconductors, and chip maker Intel has already announced plans to scale up its manufacturing of semiconductors, with new factories opening in the US and Europe. However, this will take time, so consumers will likely still be feeling the impact of this shortage well beyond Christmas 2021.

The global supply chain of a smartphone processor