No, not delicious tortilla chips. I’m talking about semiconductor microchips.
We have a global shortage of chips. These are the chips used in cars, laptops, refrigerators, gaming consoles, microwave ovens, smartphones, and even toys.
There’s no shortage of wires, circuit boards, or the other parts the chips need, just the chips themselves.
So, why is there a shortage of chips? Few manufacturers have enormous warehouses full of the parts they need to make whatever they make. Instead, they rely on just-in-time (JIT) inventories. Manufacturers place orders and schedule deliveries to be just in time for the production line: no high warehousing costs, but a considerable dependency on getting deliveries on time to keep production running.
Along comes a little thing called COVID-19, and suddenly deliveries aren’t getting where they need to be, just in time, or sometimes ever. Ships carrying chips ended up stuck in port in Asia instead of making deliveries to manufacturers worldwide.
Then, the COVID-19 induced lockdowns resulted in consumers buying vast numbers of computers, phones, tablets, appliances, gaming consoles, and other electronic goods as they whiled away their time inside. Inventories for pretty much everything shrank, and manufacturers panicked and started buying all the chips they could get, driving up their final products’ cost.
A fire at a Japanese chip-making plant that makes much of the global supply of micro-controller units used in cars hasn’t helped. Severe weather in Texas closed down chip factories from Samsung, NXP Semiconductors, and Infineon that also make chips for the auto industry.
The chip shortages have forced many automakers to shut down production lines for less profitable vehicles and GM, Ford, Volkswagen, Subaru, Toyota, and Nissan are all building fewer vehicles overall.
Most global chip production is in Asia. Asian companies have been slow to invest in new chip fabrication plants for new 5G and processor technology and are having a hard time ramping up production. Taiwan Semiconductor Manufacturing Co Ltd (TSMC) and Samsung, in Korea, make chips for thousands of applications for hundreds of companies.
So; the factories are in Asia, container ships haven’t been crossing the ocean as regularly as before, demand has skyrocketed, and nobody has warehouses full of chips.
How do we fix the problem?
“Making chips” is a process called semiconductor device fabrication and happens in factories known as “fabs.” These fabs cost billions of dollars to build and can take two years to get up and running.
Since only about 12% of the global chip making capacity is in the US, the US government is seeking billions in funding for legislation to supercharge chip manufacturing at home. Intel has announced plans to build two new fabs in Arizona. Up to now, Intel has only built chips for Intel. Intel says the new fabs will make chips for other companies, too. TSMC also announced a new fab in Arizona, and Samsung plans one in Texas. Both manufacturers currently make chips for many companies.
It will take a year or two to get productions lines and the chip fabs they rely on, up to speed again.
A couple of useful Windows 10 tools
SNIP & SKETCH
Snip & Sketch lets you do screen captures and annotate your captures. Press the Windows key + Shift + S to open Snip & Sketch.
Clipboard History now keeps the 25 most recent things you’ve copied so you can reuse them. Open Clipboard History by pressing the Windows key + V.
What’s the difference between putting a microchip in a snail and punching a grasshopper in the face?
One is bugging a slug.
The other is slugging a bug
Do you have a computer or technology question? Greg Cunningham has been providing Tehachapi with on-site PC and network services since 2007. Email Greg at email@example.com.