What is Causing the Global Semiconductor Shortage?

Semiconductors are one of the most widely used components in electronic circuits, found in microchips, transistors, solar cells, and LED displays. Due to the vast range of applications that microchips are used in, the shortage is affecting multiple industries all over the world. So, just what is causing the semiconductor shortage?

Causes of the shortage

Covid-19

Just as it has with most industries around the world, Covid-19 has played a major part in the disruption that the electronics industry is enduring. The pandemic has caused falls and surges in demand that have impacted production levels and made the market unstable.

For example, there was a huge demand for personal computers and games consoles during the lockdown periods, but this demand faded as restrictions were lifted, and there was a lull in the demand for automotive microchips as people were forced to stay home.

In addition to this, Covid-19 has also caused many production issues that have contributed significantly to the semiconductor shortage. Businesses have been forced to temporarily close, have had limits imposed on the number of workers they can have on site at one time, and have had to deal with travel restrictions, all of which have significantly affected lead times.

The fast growth of new technologies

The pandemic isn’t the only factor that is causing the semiconductor shortage. The fast growth of new technologies means that demand is outstripping supply for universal components such as semiconductors and MLCCs.

The burgeoning smartphone and IoT markets are putting additional strain on already stretched manufacturers of microchips, but there is still demand for older technologies that also use microchips, such as the automotive industry. As microchip producers choose to focus their limited resources on the technologies that have better profit margins, other industries are left wanting.

Increased production of microchips requires an increased supply of semiconductors, and manufacturers are struggling to keep up.

US-China trade war continues

Further compounding these issues is the ongoing trade war between the US and China. When Huawei was blacklisted in the US, several US-based microchip producers were forced to cease trading with the Chinese tech giants, resulting in financial difficulties for both parties.

International disputes such as these can have a devastating effect on the market, as manufacturers need to create the products that are in the highest demand, but also need assurance that they will be able to sell these products before they use their limited resources to produce them.

How to deal with the semiconductor shortage

Despite these problems, OEMs and CEMs still need semiconductors to create their products. Semiconductor dependent microchips are used in almost every modern electronic device, including cars, computers, smartphones, games consoles, and smart assistants.

The best way to navigate the semiconductor shortage is to work with a distributor who is experienced in managing component shortages. Rebound Electronics is an independent electronics distributor, meaning we are uninhibited by UK franchise agreement restrictions. We have offices in 17 countries and our flexible approach allows us to source components globally and keep supply chains moving.