Semiconductors and the electronics shortage.

How The Global Shortage Of Semiconductors Is Affecting The Electronics Market

Unless you have been living under a rock, you will most likely be aware of the global supply shortages that the world has been facing in recent times. From the summer scrabbling for garden furniture and barbeques after the container ship ‘Ever Given’ ran aground in the Suez Canal in March this year, to the inability to source a PS5, 2021 has certainly been a trying time for both distributors and consumers alike. One of the most challenging aspects in the logistics chain has been the shortage of semiconductors and how it is affecting the global supply of electronics. Is there an end in sight?

What Exactly Are Semiconductors?

Simply put, a semiconductor is a material that conducts current, allowing it to become measurable electric current. Usually (but not exclusively) made from silicon crystals, they are used extensively in electronic circuits so a worldwide shortage will obviously have a knock on effect on the availability of our beloved electronics. Thousands of digital consumer products such as mobile phones and smartphones, digital cameras, televisions, washing machines, refrigerators, gaming consoles and LED bulbs also use semiconductors. In addition to consumer applications, semiconductors play a vital role in the operation of ATMs, trains, the internet, communications and medical equipment, so to say they are a necessary component in the electronics world would be something of an understatement.

Why Is There A Shortage Of Semiconductors?

When all else fails, blame Covid-19. A global pandemic has obviously had a major impact on the shortage of semiconductors but it alone is not completely to blame. According to industry experts, there are many reasons for the supply shortages with the pandemic simply being the last straw in an otherwise struggling market. Depending on who you ask, there are many other factors at play – logistical headaches have contributed significantly, with a rise in air freight fees and the lorry driver shortages to blame along with many tech companies stockpiling at the beginning of the pandemic causing a supply issue early in 2020.  A lockdown fuelled boom in games consoles, laptops, work from home related electronics and televisions has also left chipmakers worldwide overwhelmed by the steep increase in demand. Such is the concern in the motor industry that US electric car manufacturers Tesla are set to invest in manufacturing their very own chips to keep up with order demand with the gap between semiconductor chip order and delivery times ranging between 18 weeks and 6 months, while pre-pandemic wait times averaged around 12 weeks.

Natural disasters have also had an impact. A devastating winter storm in Texas earlier this year shutdown semiconductor factories in the US, and a fire at a plant in Japan caused a similar delay. Add to that the US trade war with China and the difficulties that US-based microchip manufacturers (of which semiconductors are a key component) encountered after they were forced to cease trading with one of their main buyers, Huawei. This turn of events understandably affected the production of microchips in the same volume as before.

The bottom line is, while the pandemic accelerated an already precarious situation for chip makers in the middle of a tech boom, supply just cannot keep up with demand, and sadly, it is unlikely to improve anytime soon

Is The End In Sight?

Again, the answer to this very much depends on who you ask. The good news is that China increasing production of semiconductors but a summer 2021 forecast from Flex, the world’s third biggest manufacturer of semiconductors, is definitely on the gloomier side, warning that the crisis could continue well into 2022. Many car industry giants have also warned of a continued shortage until late 2022, with a recovery not fully expected until 2023. This comes after the semiconductor chip shortage is rumoured to have cost the global automotive industry $210 billion this year alone. The end may be near, but there is a while to go yet until stocks are back at pre-pandemic levels. Our advice? Pre-ordering will be your best friend when it comes to sourcing the electronics that you want, or indeed need.

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