Difference Between Samsung Galaxy Note U.S Phone Vs International Version Global Microchip Shortage – When and How Will It End?

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Global Microchip Shortage – When and How Will It End?

The world is currently facing a severe semiconductor shortage, and it shows no signs of abating anytime soon. Despite concerted efforts by semiconductor manufacturing facilities and government initiatives, the microchip shortage continues as demand has increased amid a disrupted supply chain.

From smart devices to dryers, cars to electric toothbrushes, machines to toothbrushes, and everything in between harnesses the power of microchips, the building block of technology. Like many other current global issues, the semiconductor shortage initially started with the COVID-19 pandemic, but the ongoing chip shortage has brought production lines to a halt. The global silicon chip shortage came as a surprise to many investors who rely on the small, scalable electronic component to make electronics products and cars. Aside from investors, consumers are also facing an unprecedented semiconductor shortage that has led to delayed car deliveries, home appliance shortages, more expensive phones, and these effects will last at least until the first half of 2022.

Every Industry is at risk

According to an analysis by an investment bank Goldman Sachs, Semiconductor depletion is least affected 169 different industries, from small manufacturing centers to large conglomerates. As most chip production remains concentrated among a few suppliers, the decline is likely to worsen. One of the world’s largest semiconductor buyers, Apple Inc. had to delay the launch of the iPhone 12 by two months due to a shortage of microchips. South Korean technology giant Samsung it is also experiencing the knock-on effects of chip imbalance in the IT sector, especially around some products and display products, and therefore, the company may have to stop launching the next one. Smartphone Samsung Galaxy Note until 2022. Siemens, one of the leading suppliers of automation systems for electrical networks, buildings and trains is constantly trying to reduce the potential risks from component shortages. Industries manufacturing televisions, washing machines, refrigerators, and other commonly used household items are among those facing severe consequences of microchip shortages in the coming months.

An average car requires somewhere between 50-150 microchips. The shortage caused automakers like Volkswagen, Honda, Toyota, and General Motors to temporarily shut down production. Some car manufacturers are putting out high specs in their vehicles due to the limited supply of electronic components. A moment Nissan leaving navigation systems outside the car, Ram Trucks up to equip their trucks with intelligent rearview mirrors that monitor blind spots and Renault some models no longer have a digital display behind the steering wheel. The rental car industry is also suffering from the impact of the chip shortage as they cannot quickly receive orders for new vehicles at a time when demand is already high. Companies in China are building up stocks of in-demand chips to cushion the effects of the global semiconductor shortage, but that’s only making it harder for other companies to get hold of the microchips.

How did the Global Semiconductor shortage occur?

• Corona virus pandemic


Lockdown restrictions imposed during the COVID-19 pandemic have had a severe impact on manufacturing industries as plants have been shut down and production has come to a standstill. A temporary ban on manufacturing activities along with stricter restrictions on ports and international borders has slowed down the movement of goods. At the same time, the demand for new electronic equipment has exploded due to the work from home policy, the increasing need for online classes, and the upgrading of existing home entertainment options. Most electronic devices such as mobile phones, laptops, etc. require semiconductors, but due to production shutdowns, many industries that manufacture these devices have not ordered enough semiconductors to meet the increased demand in the future. Not only the electronics sector, but also healthcare, cosmetology, construction, defense, and many others have had to face the weight of the semiconductor supply chain. Now that the pandemic is slowly starting to subside, pent-up demand for electronics and vehicles is straining the existing supply chain.

• Panic shopping

As news of the semiconductor shortage began to spread, many industries began stockpiling chips. Panic buying added to the general shortage, reducing supply and leading to higher costs. On the rise in cases of panic buying, Tesla CEO Elon Musk tweeted, “Fear of running out is causing every company to over-order – like a toilet paper shortage, but on an epic scale” as the chip shortage continues to wreak havoc on Tesla’s supply chain. .

• US Government Sanctions on Chinese Technology

Former US President Donald Trump has fueled a shortage of semiconductors during the coronavirus pandemic, triggering a trade war with China. The Trump administration’s actions against major Chinese chip factories have caused major supply chain disruptions. First, the White House banned the Chinese phone giant, Huawei, from buying chips made with American technology. Huawei stocked up on semiconductors before the ban to keep up with production, but its rivals began pulling chips to increase their market share. Second, some SMIC customers are looking for different chip factories because there is an ongoing fear among manufacturers of potential production disruptions with new US government regulations.

• Extreme Weather

Global warming is causing extreme weather changes around the world, disrupting businesses and supply chains. Semiconductor manufacturers face the brunt of extreme weather scenarios as most manufacturing centers are concentrated in areas prone to power outages. In severe weather conditions, utilities prioritize service to residential areas instead of production centers, which stops production at factories that operate 24 hours a day. Currently, Taiwan dominates the advanced microchip market, supplying chips to customers like Apple and Nvidia. The region is currently experiencing its worst drought in 50 years, which has caused water wells to dry up. TSMC requires 156,000 tons of water per day and water shortages make the microchip shortage even worse.

• Failed forecasts

The industry experts could not think about the increase in demand ​​​​for electronic products, which led to a huge gap between demand and supply. Many smartphone and automotive manufacturers were expecting a drop in demand, so they had cut semiconductor supplies. As most industries depend on manufacturing facilities for access to microchips, the failed forecast led to supply shortages.

How to reduce the global microchip shortage?

The half-trillion-dollar supply chain is one of the most complex so there is no easy solution to end the global semiconductor crisis. A microchip only goes through 1000 steps and often crosses international borders before reaching the end user. Therefore, changes in one region’s policies affect the global semiconductor supply chain. The worst of the semiconductor shortage is yet to come, so one just needs to brace themselves and focus on things that can be recovered like resources and a network of providers.

• Expansion of Production Capacity

The global chip shortage has increased the need to invest billions in new production lines and equipment upgrades to meet the increased demand. Taiwan Semiconductor Manufacturing Co (TSMC) is responsible for producing 80% of the microchips used in cars. To meet the global demand, TSMC has planned to invest around 2.87 USD to expand the available capacity at its factory in Nanjing, China as well as invest. 12 billion dollars to establish another chip factory in Arizona. The largest chip maker in the United States, Intel Corp. expected to invest around 3.5 billion dollars to increase production at a wafer factory in New Mexico. Semiconductor manufacturer headquartered in the United States Foundries Global also plans to build a new manufacturing plant in Singapore to support the automotive, 5G mobility, and secure device segments, an investment of more than $4 billion.

• Committed to Technology Excellence

About three-quarters of semiconductor supply comes from China, Japan, Taiwan and South Korea, but the COVID-19 pandemic has disrupted the global supply chain, so countries around the world are investing billions to increase microchip production and reduce dependence. do it on foreign countries to fulfill their demands. On February 24, 2021, US President Joe Biden signed an executive order calling for a review of the US semiconductor supply chain. Biden is also looking 37 million dollars worth the investment to speed up the domestic production of semiconductors. Europe is now less than 10% global chip production. In an effort to be more self-reliant, the European Commission wants to increase chip production capacity. 20%. American technology giant Intel presented 8 billion euros for general subsidies for the establishment of semiconductor manufacturing companies. Federal incentives to the industry can increase U.S. manufacturing capacity and help reduce the imbalance between supply and demand, but assistance must be available throughout the semiconductor design and manufacturing supply chain.

• Fab-effective upgrades

While factory expansion can take up to 12 months, factory upgrades can leave capacity in three months. Investment in a standard mechanical interface (SMIF) – upgrade of an existing 200 mm manufacturing facility using additional equipment, upgrade of the cleaning area, etc. can increase wafer production capacity without additional cost for starting material, labor, or process costs. . A typical 1.3% increase in line production from SMIF’s handling features and automation can produce 325 more wafers per month. Upgrading a 200mm fab with SMIF can significantly improve wafer environmental control and extend facility life.

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