The electronic devices that you use daily can soon become unavailable on the market.
Yes, you got it right!
There is a global shortage of semiconductor chips, which are an important component of electronic devices. It is anticipated that this shortage can disrupt the global electronic market significantly.
But before understanding the reasons for the shortage, you need to understand what a semiconductor chip shortage is.
Table of Contents
What are semiconductor chips?
Semiconductors are materials with special electrical characteristics that allow them to be used as the core for electronics. Typically, it is a hard material or substance that, in some circumstances, transmits energy but not in others. Because of this, it is the perfect medium for controlling electrical current in common electrical devices.
Semiconductor chips are materials with properties that fall somewhere between conductors and insulators. They have a significant role in our society. Most of the electronic gadgets we use in our daily lives have semiconductor chips as their primary material. Electronic devices like TVs, mobile phones, cars, etc. use these chips directly or indirectly.
Now that you understand what semiconductor chips are, let us study some reasons behind the shortage.
Reasons for the shortage of semiconductor chips
Simply defined, an insufficiency of supply and high demand are the root causes of the semiconductor chip shortage. This simply didn’t happen overnight. Initially, the problem was triggered by the low supply of semiconductors brought on by the pandemic and lockdowns.
During lockdowns, the demand for laptops, computers, and other electronic devices increased significantly.
Although it is simple to blame the whole worldwide semiconductor shortage on COVID-19, the reality is far more difficult. The present supply chain crisis was just sparked by the outbreak, but many electronics sectors also have geometric issues that made situations worse.
The Russia-Ukraine war is another major reason behind the supply shortage of semiconductor chips. Also, due to some political issues between the US and China, the US has blacklisted Chinese tech giant Huawei, which is the world’s market leader in semiconductor chips.
The shortage of supply and increasing demand for semiconductor chips lead to a huge gap between demand and supply.
All of these have led to a shortage of semiconductor chips globally.
Industries Impacted
As discussed previously, semiconductors play a crucial role in the electronic market. The industries that use semiconductors chips as their primary component have been affected significantly due to the shortage. For a better understanding of the context, let’s discuss a few:
- Automobile industry
The automobile industry is the industry most affected by the crisis in semiconductor chips. Chips are used to create the interiors of automobile devices, such as cars. Due to shortages, auto companies cannot manufacture cars efficiently.
The automobile industry is losing millions of dollars due to a shortage of semiconductors. As a result, factories all over the world have been put on hold due to the worldwide semiconductor shortage.
- Appliances and consumer electronics industry.
There has been a significant interruption in semiconductor production at the same time that many of us seek new products, whether those products be gaming devices or the latest phones to keep us occupied or monitors and laptops to enable our office work.
The demand exceeds the supply. A significant delay in orders is being experienced by semiconductor producers worldwide, and it is only getting worse. Customers are being told by a lot of companies that they won’t be capable of satisfying requests for a year.
- Paint Industry.
Now you might be wondering what paint has to do with semiconductor chips. Here’s a thing to note
Paints are produced using a tinting machine. According to consumer demand, these tinting machines enable stores to produce various paint colors on-site.
Dealers that install tinting devices are not required to have a substantial number of shades on hand. As a result, if the semiconductor shortage persists for a long time, it can affect paint businesses’ ability to expand via new stores.
India’s Initiative on Semiconductor chips Shortage
India and Taiwan are negotiating a deal to set up a $7.5 billion semiconductor chip manufacturing plant. Taiwan Semiconductor Manufacturing Co. (TSMC) is a market leader in the global semiconductor industry.
The need for semiconductors is increasing along with the demand for electronics. It has become challenging for TSMC as well to meet the demand for semiconductor chips throughout the world. As a result, to increase production and meet demand, India and Taiwan are negotiating to develop manufacturing plants in India.
Every obstacle presents an opportunity. There is a chance for India to make progress while the world struggles with a severe shortage of semiconductors. India has a solid foundation in the software-intensive industry of semiconductor chip design.
In an effort to position India as a major center for chip production, the Indian government launched an incentive program in December 2021 valued at Rs 76,000 crore (approximately $10 billion) to encourage foreign chip manufacturers.
Also Read: Breaking News: Electricity Crises in India – Stockoholic (thestockoholic.co)