Electronic chip supply chain issues are leaving manufacturers behind

The demand for semiconductors, also known as chips, has grown sharply over the last year due to an increasing demand for consumer electronics. As many workers around the world transition to remote work and the need for more leisure activities at home, the number of electronic devices such as computers, tablets, game consoles and more is proliferating, exhausting the chip supply chain. This demand continues to increase while chip production levels do not. Its ramifications extend well beyond restricting PS5 console availability and into the world of automakers. It’s likely former President Trump’s pre-pandemic tariffs on China are at the root of the shortage as many companies stockpile.

According to CNBC:

• On Tuesday, GM announced it would extend production cuts in the U.S., Canada and Mexico through mid-March. They join a long list of major automakers, including Ford, Honda and Fiat Chrysler, that have warned investors or slowed vehicle production over chip shortages. But not only the automotive industry is struggling to get enough semiconductors to build their products. AMD and Qualcomm, which sell chips to most of the leading electronics companies, have noticed the shortage in recent weeks.
• Chips are likely to remain in short supply over the coming months as demand is higher than ever. The Semiconductor Industry Association said in December that global chip sales will increase 8.4% in 2021 from total sales of $433 billion in 2020. That’s up from 5.1% growth between 2019 and 2020 — a remarkable jump considering how big the absolute numbers are.
• Last year, the US imposed restrictions on Semiconductor Manufacturing International (SMIC), the largest foundry in China, preventing them from getting advanced chip-making equipment and making it much more difficult to sell their finished products to companies with US ties. Customers would have to shift their orders to competitors like TSMC, Gupta said. SMIC executives acknowledged that the U.S. move prevented the company from using its full capacity, saying geopolitical factors would prevent it from taking advantage of “this year’s rare market opportunity,” citing chip shortages .