TECHNOLOGY 18 March 2021
Silicon wafers being transported in clean rooms at the GlobalFoundries semiconductor plant in Germany
The world is experiencing a computer chip shortage due to a perfect storm of problems including a global pandemic, a trade war, fires, drought and snowstorms. It has coincided with a period of soaring, unprecedented demand – in January alone, chip sales reached a record $40 billion. Chips are now in everything from watches to fridges and your car probably has several dozen. Manufacturers simply can’t produce them fast enough.
What is causing the shortages?
The covid-19 pandemic caused an initial slump in car sales of up to 50 per cent, because few people were travelling anywhere and confidence in the economy was low. Car companies reacted by slimming down manufacturing and reducing orders for parts. This included huge numbers of computer chips, because modern cars contain dozens of them to control everything from braking to steering and engine management. According to research firm IHS Markit, 672,000 fewer vehicles than usual will have been made in the first quarter of 2021 as a result.
At the same time, there was a rush for home office items like laptops and smartphones, vital because many people transitioned to working from home. There was a similar rush for games consoles, so that people had something to do to keep their minds off the global pandemic.
