It’s hard to imagine that the demand for microchips and semiconductors could ever go down with how many electronic devices are in our lives these days.
But the sudden drop in the supply of those vital components has business owners worldwide wondering what’s going on and how they can avoid the same fate themselves.
To understand why there’s a shortage of microchips and semiconductors, we need to look at the cause, which was truly unexpected for so many businesses and consumers alike.
So, what are some factors causing this shortage?
A shortage of silicon wafers
Monocrystalline silicon wafers are used to produce microchips and semiconductors, and a shortage in the supply of these wafers is one of the main reasons for the current crisis.
The demand for microchips and semiconductors has increased significantly, while the supply of silicon wafers has not kept up with this demand.
An increase in demand for semiconductors
The rise in demand has made it harder for companies like Intel and Samsung Electronics to keep up with production levels. As a result, they have had to cut down on production capacity to maintain profits.
A delay in production overseas due to harsh weather conditions
Extreme weather conditions have caused some businesses to postpone their operations, which has led to a lack of supply for these products. Several microchip plants were forced to shut down due to heavy snowfall, which led to a considerable supply shortage.
Chip manufacturers began experiencing component shortages and expect those issues to persist as they wait for their manufacturing plants to get back up and running.
This isn’t an isolated incident: Many other companies have reported similar delays or unexpected shutdowns over the past few months, including Apple suppliers Foxconn and Pegatron.
The shortage of semiconductors is that their demand has been higher than the supply. Due to the massive demands in devices, especially smartphones and tablets, using a lot of microprocessors, there is a rising need for semiconductor manufacturing facilities.
The semiconductor manufacturing process is also more complicated than any other chip manufacturing process, and it requires a lot of investment and sophisticated technologies to manufacture these microchips. This will take several years before being able to meet the massive demands.