The Global Effect Of Semiconductor Chip Shortage

Will the shortage of semiconductor chips cause a severe plummet in the creation of tech – devices?

Recently, tech manufacturing firms such as Ford, Jaguar, Land Rover, and Volkswagen have been affected by the drop in the supply of semiconductor chips.

In 2021, it was reported that BMW’s Mini Plant in the UK suspended car production, leading to plummeted level in production since 1956.

Semiconductors are the basic component of tech devices ranging from simple devices like calculators to complex machines such as vehicles and ATMs. Semiconductor chips are produced from silicon; because of their electrical conductivity, they are fitted into microcircuits in the motherboard of devices to allow power through the circuit.

Primary tech components like Integrated Circuits (IC), electronic sensors, transistors, and microchips are built with a semiconductor chip. Due to its enormous use, it can be said to be the building block behind technologies and applications.

The global shortage is due to the inter–border restriction enforced during the COVID-19 pandemic; the effect of the lockdown resurfaced as market demand for chips increased. However, a shortage was not observed in 2020 because of the low market demand during the pandemic.

As the global shortage lingers, what does this hold for the tech industry?

Despite the increasing demand for tech gadgets, the tech manufacturing industry has suffered colossal losses due to the unavailability of semiconductors chip.

Goldman Sach, a global investment bank, in an analysis, suggested that the acute shortage has impacted more than 169 industries. Since the scare of semiconductor chip shortage is still dominant, tech manufacturing companies are experiencing a conundrum situation in market supply.

Patrick Armstrong, CIO of Plurimi Investment Managers, stated that the shortage could continue for at least 18 months before demand equates supply.

Meanwhile, several reports support Patrick’s assertion that the shortage would linger beyond 2022. The long-term solution is to build domestic manufacturing capabilities, said Secretary of Commerce Gina M. Raimondo.

As it stands, the price of tech devices have increased due to the global shortage of semiconductor chips, but would the unavailability of semiconductor chips also affect new tech discovery and experimentation?

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Photo by Brian Kostiuk

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