The shortage of semiconductors influence global production

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Semiconductors are a common component in electronic circuits and are present in virtually every technological object. The lack of chips affects the supply chains of all companies, causing a slowdown in production. The hope is that the shortage of semiconductors on the market can be stemmed as soon as possible, but supply chains will probably not be able to realign to demand before the second half of 2022.

The increase in electronics consumption during the pandemic, the trade war between the US and China, the blockade of the Suez Canal are among the causes that have led to a shortage in supplies. At the outbreak of the pandemic, it was common thought by companies that demand would decrease significantly, but instead found themselves having to face the opposite effect. Flex, one of the world’s top three chip suppliers with over 100 manufacturing facilities in 30 countries, expects the semiconductor shortage to last at least another 12 months. According to IBM, it could last until 2023.

Supply chains are expected to normalize in the medium term. For this to happen it will be necessary to increase the production capacity of the global semiconductor industry. The production of modern chips is a slow and complex process, and there are not many companies capable of making them. The production plants are already at full capacity and to further increase production, investments and time will be required to set up new plants.
This could also lead to reconsider the location of the semiconductor manufacturing plants, which are currently concentrated in China and East Asia. Governments are proving increasingly careful to ensure security of supply, at least for the strategic supply chain.

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