Why Are Semiconductors So Vulnerable to Supply Chain Shortages?
The effects of the global semiconductor shortage have had serious and ongoing effects across industries. From the supply chain shortages accelerated by the COVID-19 pandemic and natural disasters to volatile markets, factory fires, and trapped cargo ships, the reasons for the shortage are as complex and unprecedented as the shortage itself. Why is semiconductor availability still so limited? And just as importantly, for industries that rely on semiconductors, what is the path forward? Let’s start by looking at the roots of this unique modern crisis.
Supply Chain Shortages and the COVID-19 Pandemic
While temporary and cyclical shortages in the semiconductor supply are not new, the current global semiconductor shortage is unprecedented. And while the COVID-19 pandemic was not the only cause, its role in the shortage was significant and multifaceted.
The supply chain shortages started in the auto industry. At the start of the 2020 COVID-19 pandemic, automakers made dramatic cuts to their semiconductor chip orders, anticipating a drastic dip in demand for cars as global lockdowns began to take hold. At the same time as the demand for cars dropped, the demand for consumer electronics — needed to support online schooling, work from home, videoconferencing, and more recreational screen time — surged.
As a result, more and more semiconductor manufacturers were forced to shift their production lines away from automobile chips to focus instead on meeting the skyrocketing demand for the chips needed to support virtual work and learning applications, increased smart phone and video game usage, video conferencing, 5G, and more. By the time auto industry demand recovered and consumer demand was back, manufacturing space had largely been reallocated to produce chips for consumer electronics.
But this wasn’t the only way that the COVID-19 pandemic accelerated supply chain shortages. As demand jumped, the ability to meet that demand was hampered at every point in production. Lockdown measures and travel restrictions forced the temporary (and sometimes permanent) shutdown of manufacturing facilities across the globe. As factories began to re-open, they found their production capabilities were already well behind the demand placed upon them. And as the pandemic stretched on, long lead times, labor shortages, increased safety measures, and travel restrictions constrained the supply of raw materials, equipment, and components needed for semiconductor fabrication.
Supply Chain Unpredictability
Even outside the current crisis, semiconductor supply can be unpredictable. This is largely because chip foundries — the factors that manufacture semiconductors — often operate near maximum capacity, which renders chip production exceptionally vulnerable to factors such as natural disasters, accidents, and geopolitical or military crises.
Along with the COVID-19 pandemic, the current semiconductor supply crisis can also be attributed to a confluence of unforeseen factors and disasters over the past two years. A 2019 fire in Ukraine disrupted the production of parts used to package semiconductors. A 2021 factory fire in Japan took microcontroller production offline for three months. In March 2021, the cargo ship stuck in the Suez Canal blocked one of the world’s busiest shipping routes for over a week. In October of that same year, staffing shortages caused a 77-ship bottleneck outside Los Angeles docks. And the power outages caused by the 2022 ice storm in Texas forced NXP, Samsung, and Infineon fabs offline.
Demand growth for semiconductors is typically a leading edge indicator of demand growth for connectors. Connectors are crucial for establishing reliable electrical connections between semiconductor devices and other components or subsystems. They provide a means to transmit power, signals, and data between different parts of an electronic system.
It’s important to note that the connector industry has also faced its challenges, including supply chain disruptions, material shortages, and increased lead times. Although these issues have improved in recent months, the delays and increased expenses resulting from these challenges can lead to unmet deadlines, increased project costs, and potential disruptions in the supply of finished products.
Positronic Has You Covered
Even in the era of supply chain shortages, Positronic has you covered. Our global distributors carry nearly 13,000 different connector and contact part numbers, with inventory exceeding $15 million in value. You can shop distributor inventory on their websites, which are listed below.
FC Lane Electronics
SM Creative Electronics
Proten Electronic Corp
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