The Pandemic’s Effect on Semiconductor Supply
By now we’ve all felt the enduring effects of the pandemic’s impact on the global supply chain. We’re accustomed to purchasing an item like a laptop and having it arrive at our door sometimes as soon as the next day. These days, however, it’s common to see deliveries of the same laptop take anywhere from 3, 6 or 9 months! A shortage of semiconductors (also known as chips) brought on by COVID-19 has led to a lack of inventory and long delays, and shows no signs of recovery any time soon. Here’s why:
Factory Shutdowns in Taiwan and Korea
The vast majority of semiconductors are manufactured in foundries in Taiwan and Korea. As COVID-19 led to shutdowns across the world, factories creating chips shut down as well. Semiconductors are expensive and complex to manufacture. They require many steps, multiple days and teams of experts to complete. Large investments are being made to build new foundries, but they will take time. A new foundry takes billions of dollars and years to complete.
Skyrocketing Demand for Electronics
The quick and rapid shift to working remotely triggered a huge rise in demand for items like laptops and network equipment. This, coupled with the shutdowns of the chip manufacturing factories, added to an ever-growing backlog of orders.
Greatly Reduced Capacity at Ports in China and the US
A shortage of dock workers – either out sick with COVID-19 or quarantining – have created long queues of container ships full of products waiting to be unloaded for periods lasting 10 days or more.
A Lack of Shipping Containers
One of the biggest obstacles currently facing all industries is a lack of shipping containers. COVID-19 brought a sudden need for items like PPE to be shipped to low export countries. The low appetite companies have for paying to ship empty containers has left huge amounts sitting idle.
Now more than ever it is important for businesses to work with their vendors and create longer term plans for their hardware needs. It is suggested that in order to mitigate the effects of delivery delays businesses should determine their needs and plan to place their orders at least six months out.
For Further Information visit:
Why the World is Running Out of Computers
Why There are Now so Many Shortages
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