How The World Ran Out Of Semiconductors

While it is easy to blame the COVID-19 pandemic for this situation, the truth is that the global semiconductor supply chain had this coming for some time.

Article by Hamza Mudassir, Visiting Fellow in Strategy, Cambridge Judge Business School

There’s a global shortage in semiconductors, and it’s becoming increasingly serious. The US is currently reviewing its supply of the technology, following a landmark executive order from President Joe Biden.

The president also pledged US$37 billion to cover the short-term costs of rebuilding and securing America’s supply of semiconductors, which are a fundamental part of microchips and thus integral to everything from computers to smartphones to renewable energy and military hardware.

Advertisments

The automotive sector has been worst affected by the drought, in an era where microchips now form the backbone of most cars. Ford is predicting a 20 percent slump in production and Tesla shut down its model 3 assembly line for two weeks. In the UK, Honda was forced to temporarily shut its plant as well.

Even highly experienced tech companies such as Nvidia and Microsoft are struggling to provide a steady stock of graphics cards and Xboxes respectively. It appears that no company, big or small, tech or non-tech, is safe from the wide-ranging impact of the great semiconductor famine of 2021.