Emerging Markets and Supply Chain Issues
A number of emerging markets are continuing to experience supply disruptions even though production seems to be picking up globally. Chip fab and semiconductors are just one example of the issues manufacturers face. This means exponentially explosive growth curves that will significantly limit computation. From chip fab focus to setting up the industry to be more resilient, how can we identify the problems and start to fix them for the future of technology?
Semiconductor Supply Chain Issues
Truthfully, underlying issues around the supply chain are driven by the macro influences related to computer chip manufacturing in the world markets. Simply put, the semiconductor industry cannot keep up with demand. The domino effect we are now experiencing means continued long lead times, miniaturization, rapidly increasing wafer prices and computational power gains that will require even more development with more sophisticated equipment. The chip fabrication industry alone will also be affected by various macro and micro influences that guarantee supply chain issues will remain front and center for at least five to eight years.
What Does This Mean for Global Chip Fabrication?
While COVID-19 was a catalyst in the chip shortage, industries like automotive are ever-changing. More chips will be required to keep up with the growth of electric vehicles and the constantly growing demand for more automation. The global semiconductor manufacturing market is projected to reach 119 billion USD by 2026. The growing integration of semiconductors exhibits a CAGR of 8 percent during this forecast period, mainly due to rising innovations such as wearables, smart homes, smart devices, medical devices and vehicles. But how will manufacturers keep up with this integration and a supply chain continually falling short of demand?
The Effects of Chip Supply Chain Shortages
The chip shortage has had a more profound effect on the automotive industry due to low inventory and higher pricing. According to a report from Fortune Business Insights, the semiconductor manufacturing market stood at 64.55 billion USD in 2018. While an increase in the use of chips is expected and very logical, supply chain shortages won’t necessarily be saved from the effects of falling sales.
In early 2022, we saw a decline in PC and electronics sales. Sandeep Deshpande, Head of European Technology Research at J.P. Morgan, explains, “We’re nearing the end of the supply crunch. However, capacity still needs to be qualified in the automotive industry. Can the right matching occur between available supply and correct qualification? This is the difficulty that remains.”
How to Make Your Business More Resistant to Current Global Risks
The Harvard Business Review explains that manufacturers and OEMs should bring higher-margin products closer to home first, “…thin margins leave no financial room for experimentation, learning, and the initial capital expenditure needed to maneuver in a world of new technology and higher labor costs. As a result, it’s difficult to make the business case for a move, and companies remain paralyzed in place. But when relocation is considered in terms of the total amount of margin repatriated, instead of total cost savings, the business case becomes compelling. And as a company continually improves its manufacturing proficiency with higher-margin products, it can then turn its attention to relocating the manufacture of lower-margin products.”
And while most of those chips are new, we should consider more than just the cutting-edge nodes and fabs. “Significant risks to supply chains will continue if semiconductor chips produced in North America need to travel back to Asia for assembly and testing,” explains Harvard Business Review. The review demonstrates that we can also jump-start fixing the supply chain by establishing component standards, building a chip reserve that operates like the petroleum reserve, and encouraging component suppliers to reuse chips from obsolete products. Whether you are in the business of renewable energy or supercomputing, we offer more ways to fix the U.S. semiconductor supply chain issues. We offer you the most extensive, obsolete electronic parts and components inventory in stock and available.