How Long Will the Semiconductor Shortage Last?

As the semiconductor shortage persists, buyers of electronic components must evaluate how long these issues could last.

Evidently, an ample supply of semiconductors is crucial for manufacturing across almost every industry.  The semiconductor shortage has had a significant impact on the production of many goods, making many projects unfeasible for manufacturers.  For this reason, electronic component buyers must evaluate the shortage, and how long these affects could persist.  In a Yahoo Finance interview, Intel CEO Pat Gelsinger provides his realistic outlook on the semiconductor shortage.  Gelsinger indicated the industry wouldn’t move past the chip crisis for “a couple of years” because it requires an overhaul of the worldwide electronic components supply chain.

What caused the Semiconductor shortage?

The semiconductor shortage had multiple causes that all compounded at once.  The driving factors of the shortage has been closely tied to the pandemic, and the largest of these factors are as follows:

1. Global-wide shut-downs caused a sudden cease in production that resulted in diminished supply.
2. The demand for electronics experienced dramatic growth during lockdowns, increasing the competition between the automotive and tech sectors for the remaining chip supply.
3. Automakers underestimated the demand for cars in Q2 of 2020 and decreased production, further spiking demand.
4. The cost of silicon has increased considerably due to the mass production of the COVID-19 vaccines. This is because the silicon used to manufacture the vials is the same as the silicon involved in manufacturing chips and personal computers.  Additionally, other raw materials involved in semiconductor production have also become scarce.

The global semiconductor shortage and tensions with China has led many nations to scrutinize their supply chains, which has created a drive to regain leadership.  Due to the nature and depth of these issues, there is no quick fix to the semiconductor shortage.  According to Gelsinger, the only way to recover is to increase the component sector’s manufacturing capability.  In order to support this leap in demand, chipmakers must take aggressive action to expand their output.  President Joe Biden said that the U.S. will invest aggressively into the semiconductor sector, proposing a $50 billion investment.  During a press conference in March, Intel announced that it is committing $20 billion to build two new fabrication plants in Arizona.

As the electronics industry combats persistent shortages, how can purchasers of electronic components equip themselves to navigate these turbulent times?  Because even the most minor supply chain hiccups can produce a ripple effect of delays and withered profits, supplier diversification is a simple but critical measure to ensure a supply chain’s resilience through turbulent times.  At Aegis Components, our global network of suppliers has been vetted and refined over the last decade.  We also maintain strategically placed locations all around the world to help us locate and secure products globally and offer you the most competitive pricing and terms according to your delivery schedule.

Add Aegis Components to your approved vendor list, and let our team help you make strategic and well-informed purchasing decisions.

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