Chips that run your smartphones, wearables, TVs, cars and almost everything your life depends on, is facing a supply crisis. Furthermore, the growing demand and increasing reliance on electronic products may turn global chip shortage from bad to worse.
IDC reports show that worldwide semiconductor sales are only going to grow at unprecedented rates. The sales grew to a mammoth $464 billion in 2020 versus $412 billion in 2019.
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Ford motors to temporarily shut down production
The industry that has been affected the most is automobile. Ford had to slow the production of its F-150, Escape, and Corsair lines. It has also hit their plans for the upcoming Bronco that is scheduled for a summer debut. Many companies are currently grappling with shortage of chips and rationing the few available pieces to finish priority projects.
Stellantis, world’s 4th biggest car maker too is of the opinion that the situation has gotten worse last quarter.
Brandon Kulik, principal at Deloitte Consulting says, “Chip shortages will likely impact electronic device availability and costs. And when we talk about electronic devices, we go well beyond PCs and phones and gaming consoles and should include consumer products like home appliances, home networking, and wearables. If we see shortages in the CPU and GPU markets, improving the way that data is managed could become more difficult and the costs to manage that data will grow.”
Various manufacturers are starting to or already have shut down factories, slashed productions, and laid-off workers.
However, the pinch is now getting felt by industries other than car makers.
Other companies are starting to feel the pinch
As demand for these chips continues to grow, industries other than car manufacturing are starting to feel the pinch.
South Korea’s Samsung recently accepted that the global chip shortage is affecting its TV and appliance production.
Head of Samsung’s Investor Relations, Ben Suh, said on a call with analysts, “Due to the global semiconductor shortage, we are also experiencing some effects especially around certain set products and display production. We are discussing with retailers and major channels about supply plans so that we are able to allocate the components to the products that have more urgency or higher priority in terms of supply.”
Biden Administration to meet Auto leaders to address global shortage
On May 11, Reuters reported that Gina Raimondo, US Commerce Secretary, is planning for a May 20 meeting with top auto leaders to discuss the shortage.
Speaking on the occasion, Raimondo said, “We need to get back into the business of making more chips in America. And the supply chain issues are very real.”
“We are working on it but there is no quick fix. We’re in constant contact with the auto companies, the semiconductor companies, we’re going to try to do what we can to ease the shortage short-term but in the long run the solution is to be less reliant on China and Taiwan and making more chips in America,” she added.
The Biden administration along with top car manufacturers will try to find immediate solutions for the crisis and end the global chip shortage through the summit.
Let’s see if the world leaders can control this on time, unlike the pandemic.
