The need for semiconductors, also known as chips, surged in the last year due to an increase in demand for consumer electronics. With many of the world's workforce switching to home offices and an increased need for finding more leisure activities at home, electronics such as computers, tablets, gaming consoles and more soared, depleting the supply chain for chips. This demand continues to rise, while chip production levels do not. Its consequences stretch much farther than limiting PS5 console availability reaching into the automaker world. It is likely that former President Trump's tariffs on China prior to the pandemic is the cause for the shortage, with many companies stockpiling.
- On Tuesday, GM said that it would extend production cuts in the U.S., Canada, and Mexico until the middle of March. They join a long list of major automakers, including Ford, Honda and Fiat Chrysler, which have warned investors or slowed vehicle production because of the chip shortage. But it’s not just the automotive industry that’s struggling to get enough semiconductors to build their products. AMD and Qualcomm, which sell chips to most of the top electronics firms, have noted the shortage in recent weeks.
- Chips are likely to remain in short supply in coming months as demand remains higher than ever. The Semiconductor Industry Association said in December that global chip sales would grow 8.4% in 2021 from 2020′s total of $433 billion. That’s up from 5.1% growth between 2019 and 2020 -- a notable jump, given how large the absolute numbers are.
- Last last year, the U.S. placed restrictions on Semiconductor Manufacturing International (SMIC), the biggest foundry in China, barring it from getting advanced chip manufacturing gear, and making it much harder to sell its finished products to companies with U.S. ties. Customers needed to shift their orders to competitors like TSMC, Gupta said. SMIC executives acknowledged that the U.S. move has prevented it from using its full capacity when it said geopolitical factors would prevent it from seizing “this year’s rare market opportunity,” referring to the chip shortage.