Semiconductors power much of what we rely on in our daily lives, such as electronics and automobiles. Today, electronics are estimated to account for 40% of an automobile’s value. This makes the shortage of this critical component very concerning for the United States economy.
According to Morris A. Cohen, a writer at Penn Today, “To understand the scope of the shortage, precedent for it, and whether the shortage might end any time soon—freeing up supply for everything from medical diagnostic equipment to smart fridges.”
According to Hitachi High-tech global, semiconductors possess specific electrical properties. A substance that conducts electricity is called a conductor, and a substance that does not conduct electricity is called an insulator. Semiconductors are substances with properties somewhere between them, which allows them to act as mergers.
Making up 9% of the total semiconductor market, the automotive industry is running out of chips. The global semiconductor shortage began during the first quarter of 2021 and has already brought hundreds of assembly lines to a halt. The lack of the tiny silicon chips has slowed the production of everything from smartphones and home appliances to driver-assistance systems. Major automakers, including US-based General Motor, have already announced significant production cuts, lowering revenue projections for 2021 by billions of dollars and potentially causing millions of people to lose their jobs in layoffs. Sales dropped by as much as 80% in Europe, 70% in China, and nearly 50% in the United States, due to a lack of demand for new cars.
The effects of the semiconductor shortage have spread beyond the auto market, with other industrial manufacturers and companies struggling to obtain chips. This highlights the weakness of these supply chains, which rely heavily on Asia as a semiconductor manufacturing source. As the semiconductor crisis is ongoing, most manufacturers don’t see a fast way to resolve the shortage. Automakers and chipmakers will need to work collaboratively to meet growing demands.
While chip shortages are likely to stay stagnant in the months ahead, supply stability plans must be developed for our economic future. For years, computer hardware company International Business Machines Corporation has worked to strengthen the US microelectronics supply chain for many years now, and the difficulties are apparent. IBM has recently begun laying the groundwork for an environment to help secure and advance the US microelectronics supply chain.
