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Asian chipmakers are in a hurry to expand their production capacity, in light of the global shortage that has affected carmakers the most. However, the firms warn that the supply gap will not be filled immediately and could take months to catch up with demand.

Automakers like General Motors and Honda are shutting down assembly lines because of the chip shortages. Some of these problems can be traced back to when the former US administration introduced sanctions against Chinese chip factories.

Some of the firms have furloughed staff because of this procession of problems.

The problems that started this

Eight-inch wafer-making plants, owned by Asian firms, for the most part, tend to make older and less sophisticated chips. Currently, they are under the most pressure because of under-investment in recent years.

These factories are the kind used to make auto chips, which is why the shortage is so acute.

Consumer demand in China, especially for cars, has seen a resurgence which came quickly, considering that most of the world is still reeling from COVID-19 effects. Orders for things like laptops and phones in regions still grappling with the pandemic, like Europe and the US, have also started increasing.

How bad is it?

The global issues arising from the chip shortage were highlighted when companies like Taiwan Semiconductor Manufacturing and SK Hynix, among others, announced their quarterly earnings. Shao Haijun, the co-CEO of China’s leading chipmaker Semiconductor Manufacturing International said that the company is under great pressure.

Last week, the company announced that it would increase capacity by 45,000 wafers per month, in its 8-inch fabrication plant in 2021.

It is expected that if the semiconductor factories are back in operation, hopefully with increased capacities, they can catch up to demand this summer.