Semiconductor Shortage Pressures Tech, Auto Manufacturing

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The continuing Covid-19 pandemic has seen many industries shrink and retract in the wake of problems like supply chain disruptions, along with measures taken to help reduce the risk of spreading the virus among employees. However, both the automobile and tech sectors have managed to stay afloat, with the latter in particular doing increasingly well. Now, a shortage of key components is shaping up to seriously impact the amount of these goods companies can produce.

Semiconductors are crucial components found in many electronic devices, such as smartphones, computers, and video game consoles. These chips are also important for modern car manufacturing, being used for information systems and power steering, and have been growing in usage as cars become more advanced. Most of these components are made by companies like Taiwan Semiconductor Manufacturing Co. and United Microelectronics, who then ship their parts further down the supply chain to various chip developers.

Due to the pandemic, there was a massive increase in demand for consumer electronics in the U.S. and Europe, especially for tablets, laptops, and phones, as people found themselves under Covid-19-related lockdowns. The rise in telecommuting also meant many would now need these devices, or updated versions of them, to be able to do their work properly.

A faster-than-expected economic recovery in China for both electronics and cars, along with the stockpiling of chips by Hauwai in advance of U.S. sanctions back in September, have also compounded matters. Ford and Nissan have both confirmed they would be cutting production of vehicles at plants in the U.S. and Japan due to the shortage, creating concerns about the future state of the industry. Many tech semiconductor manufactures are expected to be running at full capacity for at least the next six months, as others are booked for order through the second and third quarters.