What is Causing the Global Chip Shortage?

The global semiconductor shortage has been growing as more industries begin to rely on smart technology. The demand for these chips has risen dramatically since the start of the Covid pandemic. But if consumers demand tech with more chips, why aren’t more being produced?

When you think of a device as “smart,” think semiconductor chip.

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Anything that processes information digitally uses one of these chips. As our world gets smarter, the usage of semiconductors has ramped up. They’re practically everywhere now. Your phone, computer, new car, smart refrigerator — they all use one of these chips to operate. Part of the issue is the difficulty and overhead of producing these smart chips. Factories can take years to build and cost billions of dollars. The majority of that cost is the semiconductor tools themselves.

South Korea and Taiwan produce the majority of semiconductor chips, and The Taiwan Semiconductor Manufacturing Company produces nearly 25%. If something happens in that particular region that delays production, a massive bottleneck is in place. The rest of the world suffers as a result. Conversely, a shortage of U.S. truck drivers has also supported this bottleneck.

Although manufacturers of smart products have started using older chips, experts believe that an increase in U.S.-based production is necessary to meet global demand.

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