Title: Materials shortage latest setback for global components industry | Sourcengine
Headings: Raw Material Shortage Marks Latest Setback for Components Industry
Raw Material Shortage Marks Latest Setback for Components Industry
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COVID-19 Worsens Existing 8-Inch Wafer Shortage
Leading Carmakers Suspend Production Due to Chip Shortages
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Content: COVID-19 Worsens Existing 8-Inch Wafer Shortage
Although the chip shortage began manifesting late last year, the raw materials shortfalls that prompted it are older. In Q3 2019, industry analysts began seeing signs of a deficit in 8-inch (200mm) silicon wafers. The problem was a result of 3 overlapping, concurrent issues: surging demand, manufacturing difficulties, and international commerce tensions. First, 5G network deployments and rising interest in electric automobiles resulted in a high demand for integrated circuits (ICs). Second, foundries could not significantly increase wafer output because they lack the equipment needed to fabricate the older, 8-inch wafer type. Third, Chinese chipmakers began stockpiling silicon to avoid future and retaliatory tariffs issued by Washington and Beijing. Even with wafer foundries working at 99 percent capacity, those three factors introduced disruption to the global component sector. In Q1 2020, COVID-19 reached pandemic proportions and prompted a widespread sequence of regional, government-mandated lockdowns. Those production shutdowns negatively impacted silicon and semiconductor production, which worsened existing supply.