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: 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. At the same time, American firms were cut off from chips made by China’s Semiconductor Manufacturing International Corporation after the federal government blacklisted the firm. In July, a fire at a Japanese factory cut off supplies of special fiberglass used for printed circuit boards. Then in October, a fire at a Japanese plant belonging to Asahi Kasei Microdevices took advanced sensing devices used in automotive and other industries out of circulation. As of late February, the plant was still down. As if all these disruptions weren’t enough, there have also been constraints in the global transportation system.