{"id":186794,"date":"2022-05-27T20:48:21","date_gmt":"2022-05-27T15:18:21","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=186794"},"modified":"2022-05-27T20:48:21","modified_gmt":"2022-05-27T15:18:21","slug":"knotty-supply-chains-deepen-global-chip-shortage","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/knotty-supply-chains-deepen-global-chip-shortage\/","title":{"rendered":"Knotty supply chains deepen global chip shortage"},"content":{"rendered":"\n

News<\/strong>: Recently, Toyota Corporation has been struggling to meet its production targets. It has apologised to its suppliers and customers a third time in less than two months for delaying making new vehicles and changing production plans.<\/p>\n

Nature of Semiconductor Industry<\/strong><\/h5>\n

The manufacturing process is a complex, and interconnected ecosystem with its own ebb and flow.<\/p>\n

The chip-making process is divided into front-end<\/strong> and back-end parts<\/strong>. Wafer fabrication and probe are generally referred to as front-end operations<\/strong>, and assembly<\/strong> and test<\/strong> as back-end operations.<\/strong><\/p>\n

The front and back-end processes are spread out across the globe, creating a global chip-making ecosystem<\/strong>. This semiconductor manufacturing ecosystem involves roughly 25 countries<\/strong> in the direct supply chain, and 23 countries<\/strong> in allied functions.<\/p>\n

A semiconductor-based product could cross international borders about 70 times before finally making it to the end customer.<\/p>\n

Semiconductors are produced as 200mm <\/strong>or 300mm wafers.<\/strong> The larger wafers<\/strong> are expensive and mostly used for advanced equipment, whereas smaller diameter wafers<\/strong> remain in high demand in automobile sector, laptops, tablet, and smartphone production.<\/p>\n

Why there has been a global shortage of semiconductor chips<\/strong>?<\/strong><\/h5>\n

There has been a global shortage <\/strong>of chips or semiconductor devices.<\/strong> This has been due to many reasons:<\/p>\n

The industry faced its share of glut and shortage in the past decade as consumer preferences shifted<\/strong> from one electronic fad to another.<\/p>\n

The manufacturing equipment<\/strong> needed to make the semiconductor devices were in short supply even before the pandemic began. That\u2019s because the industry was moving in the direction of 5G<\/strong> and advanced communication<\/strong>, which required expensive wafers<\/strong>.<\/p>\n

The chip making production also halted as the factories were closed during Covid-19<\/strong> induced lockdowns.<\/p>\n

Due to the pandemic hit, people switched to work from home<\/strong>, children connected<\/strong> to schools through laptops<\/strong>, get-togethers happened over video calls<\/strong>, and subscription-based mobile games<\/strong> became popular. This shift led to a surge in demand for semiconductors in laptops<\/strong> and tablets<\/strong> production.<\/p>\n

Post-lockdown, the industry gradually tried to pull itself out of the supply crunch, but they started facing the problem of exacerbated logistical complexities<\/strong>. The global supply chains were disrupted.<\/p>\n

The Just-In-Time (JIT) Approach<\/strong> used by the chipmakers became a weakness. It let firms take inputs from suppliers only when they are needed. During, due to poor demands from automobile industry, chipmakers concluded deals with other industries.<\/p>\n

About a decade and half back, semiconductors have been produced through global<\/strong> supply chain<\/strong> by interconnecting several parts of the world.<\/p>\n

The geopolitical events in Central Europe and production shutdowns in China add pressure to the already complicated semiconductor supply chain.<\/p>\n

Russia\u2019s invasion of Ukraine strained exports of essential commodities<\/strong> required to make chip sets. For example, Moscow supplies rare materials<\/strong> like palladium<\/strong>, and Kyiv sells rare gases<\/strong> to make semiconductor fab lasers.<\/p>\n

Way Forward<\/strong><\/h5>\n

Europe and the US have taken measures such as the European Chips Act (45 billion euros) and CHIPS for America Act ($52 billion). These measures would incentivise fab makers to set up their units in these regions and balance.<\/p>\n

Together, these two will enable the semiconductor manufacturers to have equal investments in the East and West by 2030. At present, 80% is in Asia, and 20% is in Europe and the U.S.<\/p>\n

Source<\/strong>: The post is based on an article \u201cKnotty supply chains deepen global chip shortage<\/strong>\u201d published in the \u201cThe Hindu<\/strong>\u201d on 27th<\/sup> May 2022<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: Recently, Toyota Corporation has been struggling to meet its production targets. It has apologised to its suppliers and customers a third time in less than two months for delaying making new vehicles and changing production plans. Nature of Semiconductor Industry The manufacturing process is a complex, and interconnected ecosystem with its own ebb and… Continue reading Knotty supply chains deepen global chip shortage<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-186794","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704619526},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186794","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=186794"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186794\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=186794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=186794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=186794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}