The Covid19 pandemic and the Ukraine War have disrupted the world, as everybody intensely agrees. Global supply chains were severely affected. Almost every industry hit, and the lockdown meant that life came to a halt for months and years together. Though now on the path to pandemic recovery and the rebound of industries like travel and tourism is encouraging, the electronic sector suffers. Even between August 2020 and August 2021, semiconductor demand grew 30%. Order backlogs would stretch well into 2023.
Causes like international labor shortages and shipping backlogs have only compounded the ongoing problems. Component shortages in supply are proving a costly burden on the path to manufacturing and launching electronic boards. The boards by themselves mean nothing without those tiny components. You need both the TV and computer to function!
Some reputed companies have decided to step up investments to remedy the situation. That is not easy because manufacturing plants and staggering costs take years to set up. Predictions of shortages ending in 2022 have not been realised yet. The severe lack means widespread losses to the electronics industry. Automakers are also in big trouble.
You know what happens during a shortage—massive price rises. Raw materials could not be sourced due to the pandemic, and much of the supply chain comes from Asia. Manufacturers now have incomplete products and work compelled to grind to a halt. Even before the pandemic reached America, the manufacturers had started feeling the pinch.
A chip shortage happens rarely, and this one commenced in January 2021. Trade wars in 2018 and 2019 are to blame before covid19. The Trump administration’s decisions brought about the US-China trade war. The pandemic witnessed record demands for chips because of the need for cloud computing services from companies like Microsoft Azure and Amazon Web Services.GPUs and microprocessors remain in short supply after two years of the pandemic.
Manufactured warehouse vehicles remain pending because of a few tiny chips to complete the assembly line.According to industry experts, the growth in power conductors should triple by 2030. Global sales rose by 20% in 2021 and are predicted to rise a further 9% in 2022 (reaching USD 574 billion). The silicon wafer market will grow at 5.1% over the next five years, and revenues will reach USD 10.570 billion by 2027.
Global vehicle production was also severely hit by the pandemic but is recovering. Pre-pandemic levels in auto production may be reached only by the end of 2023.
According to Deloitte, early 2023 may see an end to the chip shortage, but that seems somewhat optimistic because of the terrible condition. However, let us hope for the best. Some companies are nowadays waiting several months for chip orders to be supplied.
We have only option to wait hopefully for the present. Such massive shortages will take a long time to ease. As long as the critical infrastructure that supports life and living is in place, there is little to fear.