A global semiconductor chip shortage is delaying everything from the PlayStation 5, to Nvidia graphics cards, and Ford vehicles. So what has caused this tech crisis and how will this impact you?
Semiconductors are a solid substance that simply conducts electricity on circuit boards. It is an essential component in electronic devices from smartphones, personal computers, digital cameras, washing machines, and even LED bulbs.
While tiny in size, it has wreaked havoc across technology and automotive industries.
Here’s why there’s a shortage of semiconductor supply:
- Flow-on delays from COVID-19 factory shutdowns in 2020
- Surge in tech demand from consumers due to work-from-home and social isolation
- An unbalanced chipmaker reliance, a lack of manufacturing sites, and political ramifications from the US-China trade war
There’s also a raft of new products that need semiconductors – think smart home accessories and cars that are often sensor-laden, Internet-connected, and always-on.
Most vehicles today have around 50 to 250 semiconductors, causing a hit to new car stock that isn’t expected to return to normal for at least six months, estimates CarAdvice.
Sony’s PlayStation 5 is still a rarity months after its launch, Nvidia’s new 30-series discrete graphics cards have become a goldmine, while Hyundai Motor has temporarily halted its factories due to chip requirements for the traction motor in the battery-electric Ioniq 5 and front camera safety system in the Kona small SUV.
Other reported firms affected include Apple, Samsung, Google, AMD, Volkswagen, Ford, General Motors, Mazda, and 5G equipment.
Companies rely on outsourcing chips from semiconductor suppliers because it is more cost effective than “vertical integration”.
For example, Apple’s supply chain spans 43 countries and six continents. The iPhone’s parts like the display, processor, cameras, and memory are all outsourced from other suppliers then assembled in its Foxconn factory.
This has put a strain on Intel, Samsung, and the Taiwan Semiconductor Manufacturing Company (TSMC) – manufacturers that dominate the market in 2020, according to IC Insights.
Over time, supply will supersede demand – but companies are warning that this chip crisis may last until 2022.
TSMC and Intel are already on track to expand their semiconductor factories in the next few years, which would alleviate concerns in the long run.
For now, you might need to wait a little longer for your glimmering next phone, wearable or car to land in your hands.
The Connected by Henry Man 