The pandemic sparked disruptions to supply chains, causing concern for keeping up with the growing demand. As the U.S. economy gathers steam, these issues will become even more worrisome. Semiconductors are one of the major examples of the shortage happening currently. Semiconductors are in almost everything we use and a shortage of them is causing the technological world to be in a commotion.
Carmakers in A Pinch
The automotive industry is seeing production cutbacks, due to the shortage of semiconductors. The main companies being affected by this are: Fiat, Nissan, VW, Ford, and Toyota. Other automobile companies have publicly addressed the likeness of missing their 2021 targets. Although, the carmakers aren’t the only ones in a pinch because electronics, medical devices, and technology are all being impacted.
Creation of A New Facility
A semiconductor manufacturing facility is being prompted to be made stateside by automakers and medical device manufacturers. Although, the whole process of building a new semiconductor factory is atleast a five-year process. Taiwan has been attempting to help the shortage by increasing the spending budget by $28 billion to the largest semiconductor manufacturer.
3 Reasons for a Ticking Time Bomb
The supply-chain disruptions have been occurring since late last year, so the chip shortage has just been waiting to happen.
- When the Covid-19 epidemic hit in spring 2020, automakers curtailed orders for all parts and materials, including the chips needed for everything from touchscreen displays to collision-avoidance systems. When demand for passenger vehicles recovered in the third quarter, chip manufacturers were already committed to serving their major customers in consumer electronics and IT.
- Geopolitical concerns also played a role, particularly when the Trump administration tightened its controls on semiconductor sales to Huawei Technologies, ZTE, and other Chinese companies. These businesses started stockpiling chips for 5G cell phones and other items. At the same time, American companies were shut off from Semiconductor Manufacturing International Corporation chips when the federal government placed the company on a blacklist.
- A fire at a Japanese manufacturer in July disrupted supplies of specialized fiberglass for printed circuit boards. Then, in October, a fire at an Asahi Kasei Microdevices company in Japan rendered advanced sensing electronics used in the automotive and other industries obsolete. The factory was still shut down as of late February.
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