At the beginning of the COVID-19 pandemic, the auto industry cut back on production, thereby cutting back on the chips that operate their cars. Now, as chips are in high demand for cars and other electronics, chipmakers are facing challenges to fulfill their backlog of orders, IEEE Spectrum reported.
Historians will probably spend decades picking apart the consequences of the COVID-19 pandemic. But the shortage of chips that it caused will be long over by then. A variety of analysts agree that the most problematic shortages will begin to ease in the third or fourth quarter of 2021, though it could take much of 2022 for the resulting chips to work their way through the supply chain to products. Supply relief will not be coming from the big, national investments in the works by South Korea, the United States and Europe, but from older chip fabs and foundries running processes far from the cutting-edge, and on comparatively small silicon wafers.
Before getting into how the shortage will end, it’s worth summing up how it began. With panic, lockdowns and general uncertainty rolling across the globe, automakers cancelled orders. However, those conditions meant a big fraction of the workforce recreated the office at home, purchasing computers, monitors and other equipment. At the same time, entire school systems switched to virtual learning via laptops and tablets. More time at home also meant more spending on home entertainment, such as TVs and game consoles. These, the 5G rollout and continued growth in cloud computing quickly hoovered up the capacity automakers had unceremoniously freed. By the time car makers realized people still wanted to buy their goods, they found themselves at the back of the line for the chips they needed.
To read the full report from Samuel K. Moore in the IEEE Spectrum online, click here.
