The current global semiconductor supply chain crisis has put a spotlight on the weakness and improve ability of a vital sector that has an immediate impact on the global economy growth and technological innovation. Since the recent COVID-19 occasion which brought about a low supply of semiconductors, a critical appraisal and restructuring of the global chain of semiconductors becomes inevitable, and severally, several countries and technology firms are being very aggressive in taking measures towards constructing a stable and sustainable future of the semiconductor industry.
In the following article, the author will address the problems due to the current chip shortage, the necessary reformations and improvements for the supply chain of the semiconductor, as well as the cooperation among countries and corporations that are forging a new era of the semiconductor industry.
The Ongoing Chip Shortage: Into the Unknown
From the beginning of 2021, there was an issue in the electronics industry whereby there was a shortage of electronic chips across the world, which has mainly resulted from increased demand for electronic products mainly due to the humility effects of Covid-19, and disruptions in manufacturing and supply channels. The scarcity has affected almost every field, from automobiles to consumer electronics and medical equipment in the form of slow production and increased prices.
This issue’s origin is the dynamics of the semiconductor supply chain globally. The system of supply runs deep with companies in the semiconductor industry having their supply chain network including suppliers, manufacturers, and distributors distributed across different parts of the world. This web that ensnarled with addition to the centrality of a number of sophisticated production hubs has rendered the industry prone to random shocks such as the covid-19 epidemic.
The Crisis and the Semiconductor Industry
While the current chip scarcity persists, Semiconductors companies, captains of industries and governments have not remained idle. They may encompass financing the construction of new manufacturing plants in addition to cultivating partnerships and catalyzing the utilization of next generation solutions among all stakeholders.
Some of the key measures include:
- Investment in new manufacturing facilities: TSMC, Samsung and Intel are some of the major chip makers, which have declared huge capex to expand the production and construct new fabrication facilities mainly in Asia and USA. These expansions are likely to improve the reliability of the global semiconductor supply chain and overcome dependence on China where most production is carried out.
- Strengthening the U.S. Semiconductor Supply Chain: The US government has proposed the CHIPS for America Act that would provide incentives for building new fabrication factories or ‘fabs,’ & boost R&D in the semiconductor industry. The Act is expected to a provide a boost to the positioning of the United States of America in the semiconductors industry globally and decrease on the dependency on the foreign fabrication facilities.
- Promoting international cooperation: Indeed, due to the vulnerability of the global supply chain in the semiconductor industry, many countries and regions are seeking to diversify cooperation. The United States and Japan have agreed to work together in the implementation of advanced semiconductor technology as expressed by the memorandum of understanding the two have signed recently, while the European countries are working on the scheme known as the European Semiconductor Industry Compact for advancing technological level and Europe’s semiconductor market security.
- Advancing technology: Semiconductor manufacturers and consumers like government are now directing their monies on advanced semiconductor technologies, with a view of enhancing production and minimizing costs. Some of these programs include extreme ultraviolet (EUV) lithography that makes it easier to produce small and complex chips and artificial intelligence and automation in the production process.
Changes that have taken place in the Global Supply Chain of Semiconductors
In this process, several reforms are already expected to be introduced in the global semiconductor supply chain when the industry will return back on track in regaining the losses occurred due to the shortage of chips.
- Diversification of manufacturing sites: To reduce the challenges of disruption, stakeholders are seeking to diversify the location of fabrication plants of these semiconductor companies. Attempts are now being made to transfer most of the production capacity to other countries such as United States and Japan and Taiwan to minimize the dependence on china.
- Strengthening the ecosystem: The small parts of supply chains found in the semiconductor industry consist of numerous small players. Perhaps, the most important factor is to enhance the ecosystem and guarantee that such small participants are viable and can satisfy the demand in the long run.
- Building redundancy and contingency plans: For disaster avoidance, it is advised that organizations become diverse with their supply chain by having backup suppliers and many factories. Maintaining constantly updated contingency plans for possible incidents can contribute to lessening the effects of future disturbances.
- Enhanced transparency and collaboration: In the other case, there will be a need to enhance the free flow of information and cooperation between the industry stakeholders, governments, and other players for a better supply chain security in the semiconductor industry. It can be done by means of exchanging information obtained during production and consumption processes, as well as joint research and development projects.
The Road Ahead: A Post-Chip Shortage Era
Even as the world begins to rebuild after the Covid-19 pandemic, the factors shaping the semiconductor industry will remain diverse and complex in future; they include political instabilities, climatic changes and future advancements in technology. Meeting these challenges and establishing a stronger, more responsible and integrated worldwide semiconductor supply chain will be critical for the future of the industry.
Finally, as a result of the analyzed tendencies that are most critical for the computer industry and electronics market after the chip shortage, it is possible to state that the post chip shortage period will be characterized by more active development of strategic partnerships and international collaboration as the governments and firms will have to pool additional efforts to stimulate innovations and invest in new technologies and diversify the manufacturing locations. The adoption of extensive changes and mitigation of the risks immanent to the ongoing lines of supply can help the global semiconductor industry to build a more stable future for all participants.
Conclusion
The current problem with the supply of semiconductors globally has brought out the problem with the chain and has affected so many industries across the globe. But, this crisis has given the much-needed chance to the key stakeholders of the SC and start thinking about the current position, and trying to implement the required actions to construct a stronger, shining future for the future of the SC industry.
The global semiconductor industry can come out of the ongoing chip shortage issues stronger by supporting new manufacturing plants, encouraging international relations, developing technological solutions, and making complete changes in the supply chain. The semiconductor industry now stands at the precipice of its next major phase of evolution and cooperation, creativity, and versatility will be the primary means to success during this transition.