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The Global Chip Shortage

21-Jun-2021

By Bipashree Aryal

Img Src: moneyinc.com

What comes to your mind when you hear the word “Semiconductor”? The first thing that might come to your mind might be microchips. You might think that these microchips are not a big deal, and that’s where you would be wrong. The new modern world has been revolutionized by these semiconductor microchips. How? You might ask. These small flat chips power how humans live together, communicate, travel, cook, heal, and everything in between. From electric kettles to supercomputers used by NASA all utilize semiconductor technology. So one would think that semiconductors are very important. So how does the supply of something so important decrease to the point of a shortage?
As the COVID-19 pandemic drove the world into a lockdown, more and more people had to work from home to keep themselves floating. As a result, the demand for computer supplies skyrocketed. Along with an increase in demand for consumer hardware the providers of cloud computing services also had to keep their servers up to date and able to handle the traffic. But the automobile industry took a hit. The sales dropped and companies were forced to shut down their production lines. The average modern automobile uses around 3,000 microchips. And as the sales dropped big car manufacturers like Volkswagen and General Motors were forced to cut off their orders for those microchips.
The problem with the microchip industry is that there aren’t a lot of companies that manufacture microchips. And about 54% of all the microchips in the world are produced by Taiwan Semiconductor Manufacturing Company (TSMC). And the process of manufacturing these chips is not as efficient as you might think. As the car manufacturers cut their orders down and with the increase in demand for computer hardware, TSMC along with other major microchip manufacturers shut their production lines down for automobile chips and focused on making computer chips. But unfortunately or fortunately for the car companies, the drop in car sales was only temporary and as the demand again started to increase, they ordered huge amounts of chips again. But, it isn’t as easy as flicking a switch.
Chip making is an extremely delicate process where even a single speck of dust can cause massive problems and even a power outage will result in massive losses and weeks of careful inspection is done before restarting the plants because of this the chip-making process must be done 24/7 and once the plant is shut down it can take anywhere from 6 months to 2 years to start again. This has not only caused massive losses for the automobile industry but also has made the lives of PC enthusiasts harder.
For this shortage to come to an end, we must either wait for the market to stabilize or the chip manufacturers must build new fabrication plants which are extremely expensive and very less likely to happen. To combat this problem,  the Biden Administration is providing subsidies to set up new fabrication plants in the US. We, consumers, have no other solution than to wait.

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