Semiconductor industry

Reasons for the global chip shortage


Production stops, delivery delays, failures - the lack of chips is becoming more and more of a problem for companies from a wide variety of industries. Although the semiconductor industry has been working at full speed for months, demand continues to rise. The semiconductor crisis is particularly hard on the automotive industry. However, it is also noticeable in electronic and household appliances. In consumer electronics, display driver chips in particular, which are used to transmit information for illuminating screens, monitors or navigation systems, are urgently needed at the moment. But energy management chips are also in great demand.

The microchip industry operates through global supply chains. Elementary raw materials come from African countries or Latin America and China. The raw materials are mostly used in Japan and Europe to produce chemicals and silicon wafers. The chips are then manufactured from these. The software for the chips is mostly developed in the USA, as are the machines for production. One of the largest chip producers is the company TSMC from Taiwan. Semiconductors are produced here to order for customers – also for chip manufacturers from the USA. According to the information service IHS Markit, around 70 percent of the microcontrollers for cars are manufactured in the TSMC plants. Although TSMC stated that the situation in the auto industry would ease, there was still no solution to the general shortage. Chip production is at full capacity and the increasing demand cannot be met. Sudden production stops, e.g. due to storms or drought at other chip producers, further increased the shortage.

Many semiconductor manufacturers have already announced that they will further increase their production capacities with new production lines. However, these will tend to be limited to modern, thin chips. However, the automotive industry needs older and thicker chips. In addition, the construction of new production sites faces a number of hurdles. Because even the required machines cannot be produced in sufficient quantities at the moment, partly because there are no chips for the operating systems - a vicious circle.

The Ukraine war is exacerbating the current chip shortage. Chip manufacturers are currently concerned about the supply of neon gas, which is very important for chip production. Half of the world's resources have so far come from companies in the contested Ukrainian port cities of Odessa and Mariupol - whose production is now failing. Neon is used for helium-neon lasers used to expose the silicon wafers. So far, the neon stocks are sufficient. But if the conflict between Ukraine and Russia lasts longer, there could be significant delivery bottlenecks for neon and thus another crisis in global chip production. Because the chip industry cannot do without neon in the short term.

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