2020–21 global chip shortage
The Global Chip Shortage 2020-21 is an ongoing crisis in which the demand for integrated circuits (commonly known as semiconductor chips) is greater than the supply, impacting more than 169 industries and has led to major shortages and queues amongst consumers for video cards, video game consoles, cars and other electrical devices.
The cause of the global chip crisis is a combination of different events with the COVID-19 pandemic being the primary reason. Other causes have been attributed to the China–United States trade war and Taiwan drought.
Due to the COVID-19 pandemic, more people had to stay home and upgraded their electrical devices such as webcams, monitors and computers in order to stay in touch and be entertained. In the fourth quarter of 2020, traditional computer sales saw a 26.1% growth over the previous year.
China–United States trade war
In 2020, the United States government placed restrictions on Semiconductor Manufacturing International Corporation (SMIC), China's biggest chip manufacturer, which made it harder for them to sell to companies with American ties. These restrictions forced companies to use other manufacturing plants like Taiwan Semiconductor Manufacturing Company Limited (TSMC) and Samsung. However, these companies were already producing at maximum capacity.
In 2021, Taiwan experienced its worst drought in more than half a century, leading to problems among chip manufacturers that use large amounts of ultra-pure water to clean their factories and wafers. For example, TSMC's facilities used more than 63,000 tons of water a day, more than 10 percent of the supply of two local reservoirs.
Video game consoles
Because of the COVID-19 pandemic, more people stayed at home that led to a rise in popularity of video game consoles. With the release of the ninth generation of video game consoles, demand increased even more, with Sony warning that short supply of the PlayStation 5 console will last into 2022, while Microsoft expected shortages of the Xbox Series X and Series S to last into at least mid-2021. Ninth generation consoles were resold on websites like eBay for 50% to 100% more than their retail prices.
At the start of the pandemic, car manufacturers canceled chip orders out of concern that the pandemic would hurt sales, but unexpected demand led to a shortage of chips in stock. One example of this is when Ford parked thousands of unfinished vehicles at Kentucky Speedway, waiting for the chips to finish assembling the cars.
Electronic Product Development
There is no doubt that the chip shortages are having global ramifications for product developers. These changes will impact anyone who needs electronics design as part of their product development process. The tech boom was accelerated by the pandemic leading to a surge in Working From Home technology, entertainment systems and health related devices. Product developers are turning to Design For Availability in order to navigate the changes. Best practices include ensuring components can be sourced from multiple component suppliers and ordering well in advance. Lead times can be 12-18 months to order some components, compared to 3-6 months in the past. These disruptions are expected to continue for at least 2 years.
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