Companies dealing in cars, electronics, smartphones, TVs and any other technology that need chips, are dealing with a global shortage. The companies have expressed concern, as manufacturing delays start to appear, in the wake of rising consumer demand.
The shortage is attributed to several causes, including bulk-buying by the US-sanctioned Chinese tech behemoth, Huawei technologies. There was a fire at a chip plant in Japan not too long ago, lockdowns are still in effect across Southeast Asia and a strike in France.
Industry experts and analysts say that a fundamental problem has been the under-investment in 8-inch chip manufacturing plants owned by Asian firms.
No money, no chips
The under-investment has caused a struggle in ramping up production for the affected companies. The demand for 5G-enabled devices picked up faster than anyone predicted, exposing the shortcoming in investments.
Donny Zhang, the CEO of a Sand and Wave, a Shenzhen-based sourcing company, says that the whole electronics industry is dealing with this shortage. He had to endure delays in getting a microcontroller unit that was very crucial to a smartphone product he was working on.
The plan was to originally complete production in a month but it seems they will have to take two.
Increasing demand exposed the shortage
Another source at a Japan-based electronics component supplier said that it had a shortage of WiFi and Bluetooth chips, expecting delays that could last 10 weeks. The Chinese automotive industry sounded the alarm about this problem, earlier this month.
The first quarter of 2021 will see some automakers in China affected.
Orders for products are coming in hot and fast as economies try to snap back from the Covid-19 crisis. China, the US, and Europe are all seeing a rise in orders for products that need chips.