Title: Why We’re in the Midst of a Global Semiconductor Shortage
Headings: Why We’re in the Midst of a Global Semiconductor Shortage
Supply chain
Why We’re in the Midst of a Global Semiconductor Shortage

Content: And it’s not just carmakers that are in trouble. The chip shortages are expected to cause widespread shortages of everything, from electronics to medical devices to technology and networking equipment. As recently reported by Reuters, automakers and medical device manufacturers have asked the Biden administration to subsidize construction of new U.S. semiconductor manufacturing capacity. And in response to the shortages, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor manufacturer, has increased its 2021 capital spending budget to $28 billion. But funding and building a new semiconductor fab is at least a five-year process. To a great extent, the chip shortage has been a ticking time bomb, building since late last year due to a few (unrelated) supply-chain disruptions. When the Covid-19 pandemic caused a precipitous drop in vehicle sales in spring 2020, automakers cut their orders of all parts and materials — including the chips needed for functions ranging from touchscreen displays to collision-avoidance systems. Then in the third quarter, when demand for passenger vehicles rebounded, chip manufacturers were already committed to supplying their big customers in consumer electronics and IT. Geopolitical factors also played a role, specifically when the Trump administration began tightly regulating sales of semiconductors to Huawei Technologies, ZTE, and other Chinese firms. Those companies began stockpiling chips essential to 5G smartphones and other products.