The global chip shortage, also known as a semiconductor shortage, is something that seems to have affected everyone in the world, even though it's something that should have been obvious.
These days, almost everything contains silicon chips, from our phones and computers to our kitchen appliances and even our cars. And all this technology is getting more and more advanced, so the best processors aren't just reserved for the latest gaming PCs.
It's not the first time this has happened either: in 1988 (opens in a new window) there was a major shortage of chips due to high demand; in 2000 due to shortages of various Intel products (opens in a new window); and in 2011, an earthquake in Japan caused severe shortages of memory and NAND (opens in a new tab) displays, to name a few.
Chip shortages tend to happen for supply chain or human labor reasons, but instead industries are so reliant on these chips that they seek to overhaul the production process to make it less vulnerable to these shortages, business continues business as usual even as these crises continue. arrive.
And now that the latest shortage from 2020 has the entire tech industry in its grasp, from automobiles to the latest and greatest graphics cards and video game consoles, everyone is suddenly wondering what the global chip shortage is, why is this happening, and for how long. Will it be before you see improvement? Some of these questions are easier to answer than others, but we've gathered all the resources we can to help explain how we got here.
What is the global chip shortage?
The global chip shortage is a phenomenon that affects the semiconductor industry and the industries that depend on it when the former cannot produce enough chips to meet the demand of the latter. These chips are absolutely vital to the tech industry as a whole, being used in almost every modern electronic device in the world.
Integrated circuits are created by sandwiching tiny semiconductor nanoelectronics into layers of silicon. This invention has revolutionized electronics, and the world, for the past 70 years, but it has also created a complicated problem.
Unpredictable outages can cause massive shortages of almost any consumer good that contains or uses electronics at some point in its production. It can affect everything from the quality of rail service in cities to the food that arrives in supermarkets, far beyond simply affecting the availability of consumer goods like the best monitors, iPads and computers.
We are living in such a time right now and consumers have experienced it as a shortage of just about everything in the last two years, so much so that it is a major driver of global price inflation for most consumer goods.
What caused the global chip shortage?
The main cause of this global chip shortage is the ongoing COVID-19 pandemic, which began in late 2019. This has had two main results: disruptions in supply chains due to labor shortages, as well as a 13% increase in global demand ( opens in a new tab) for PCs due to the shift to the work-from-home economy.
In the computer industry in particular, the shortage has been further exacerbated by the rise of cryptocurrencies. Graphics cards and processors have been in short supply as those who mine these digital currencies have added an unexpected source of demand for these components, making them even more difficult for the general consumer to find.
Another cause was a series of droughts in Taiwan (opens in a new tab), one of the world's leading centers of chip production and home to Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's largest semiconductor suppliers. These droughts have affected the production of ultrapure water, which is used to clean both factories and the silicon wafers from which silicon chips are manufactured in bulk.
Several other events that further affected chip shortages, including political tensions between the United States and China, winter storms in Texas (opens in a new tab), fires at Japanese facilities, COVID-related factory closures in Shanghai and Russia ongoing. Ukrainian war.
When will the global chip shortage end?
Many industry professionals like Intel and AMD have been projecting when the semiconductor industry will recover from this global chip shortage, and the consensus has been that it will last until 2023.
Intel CEO Pat Gelsinger said that "demand has skyrocketed 20% year-over-year and disrupted supply chains have created a very large gap...and the explosion in demand has persisted," which will take years to fully recover. Dell co-founder and CEO Michael Dell also believes the shortage will last for a few more years.
AMD CEO Lisa Su has a similar perspective, believing that shortages will start to ease by the end of 2022, as "the pandemic has just brought demand to a new level." This was also supported by forecast reports from Gartner, an industry analyst firm, which said it would last through 2022 as well.
Meanwhile, TSMC and Quanta Computer, the sole suppliers of some of the best MacBook and Mac models, have considered opening new factories and moving production sites to ramp up chip production, but help alleviate shortages is still years away. . TSMC also tried opening sites in the United States, but the process was just as slow.
However, there is hope, as some recent developments have helped alleviate the shortage. The stock of graphics cards and processors, which was a pretty accurate representation of the state of the shortage, slowly recovered. One of the main reasons is due to the decline of Ethereum mining, as well as cryptocurrencies in general.
Chip factories that started before the pandemic are starting to come online, and some of the demand for new technology from home and hybrid workers for their work has been largely met to date and is unlikely. increase as it did in 2020.
However, with the release of new technology products each year and the increasing penetration of computers into previously analog products and services, it is impossible to say at this point how far away we really are from a full recovery, or if a recovery is really possible. .