The Electronic Device Supply Chain Has Being Disrupted and Here's Why?
As technology grows, so do the customer's demands. Millions of products we see in our daily lives, whether cars, smartphones or washing machines, depend on computer chips, otherwise known as semiconductors (SC). At present, an adequate amount of chips is not available, leading to a global chip shortage, disrupting popular product supply.
Why is There a Chip Inadequacy?
The chip shortage has not been a short-term problem but a long-term one. Short supply SCs perform various functions, and often there is more than one in a product. For example, American-based company - 1bitsquared has ordered thousands of electronic interface boards to connect various appliances onto the computers.
But the problems turn out to be that the chip-based device will not be available for a year or more. An analyst at Gartner - Koray Kose said that the development of 5G and its demand followed by the US decision to prevent chip sale and other techs to Huawei impacted chip scarcity. Moreover, during the pandemic, some tech giants did advance chip orders, leaving the rest to struggle for components. However, Covid-19 is not yet to be blamed for the SC shortage.
People working from home required tablets, laptops/computers, or webcams to have a streamlined working condition. But due to the shutdown of chip factories as per lockdown regulations, people struggled to buy the devices.
For several years, a global supply chain partner - OCI, said logistics expenses weren't a concern as the products would be relatively compact and fit in a single 40ft container. However, amid the pandemic, the table has turned; shipping containers around the globe started becoming expensive. For instance, sending a 40ft container to Europe from Asia would cost $17K, which is costly compared to last year ($1,500).
Higher demands to increase the capacity have been noted, though it requires a long time, but not least as chip industries are expensive to build.
Difficulty in Developing Expensive SCs
Intel and IBM's chief executives stated that the current issue might last for at least 2 years. A professor at Northwestern University - Seda Memik, said, "It will take multiple years to accomplish... a better balance." The swiftness of chip demands has been significantly increasing that scarcity was, at a point, became unavoidable, she added.
Building new chip industries swiftly is daunting as it requires efficient skillsets and, moreover, is expensive. However, it's a potential work spanner who supports onshoring and relocating SC fabrication to different countries to ease the pressure of global supply chains. Asia-based chip developers like South Korea, Taiwan, and China, are very competitive in meeting the demands and are more likely to dominate the industry soon.
The main idea is that we are currently in a tech boom era, where supplies can't work it out. Hence we would have to deal with the delays of particular chip-based products for months.
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