Crushing Impact of IC Shortage in Different Industries

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There are various reasons for IC shortage in different industries. IC shortage started mainly during the initial days of COVID-19. In early 2020, there was a massive gap between demand and supply and it was the major reason for the chip shortage in the market.

These chips are present in almost all of our daily use products. Their shortage has a massive impact on manufacturing industries like electronic manufacturing, automotive industries, medical devices, and the military. In simple words, the IC shortage has a crushing impact on various manufacturing industries. 

In this article, we’ll focus on the reasons for the IC shortage and also discuss some challenges. In the end, we’ll provide a solution as well. So, stick around with us. 

Industries Hit By IC Shortage

After COVID-19, many manufacturers and industries are still facing a massive shortage of electronic parts, such as semiconductors and sensors. The following manufacturers are badly hit by IC shortage. 

Automotives 

IC shortage has affected many industries but the vehicle industry was hit badly. The lack of sensors and other electronic parts has forced automakers to slow down, halt, or delay their production. Therefore, we have seen a massive reduction in the number of produced vehicles. 

Consumer Electronics

During COVID-19, there was a massive increase in demand for laptops and mobiles because clients were working from home and students were taking classes online. This shift put massive pressure on electronic design companies and increased demand resulted in a shortage of semiconductors and sensors. 

Even companies like Intel think that it will take years to address this IC shortage. Moreover, this shortage will increase the price of consumer goods. 

Consumer Electronics.jpg

LEDs and Lighting Fixtures

LED lights are considered to be a more sustainable option than fluorescent, halogen, and incandescent lights. LED lights are used in many consumer electronics such as smartphones and televisions. Therefore, there is a massive decrease in the supply of IC, and prices of devices have gone up by almost 10%. 

Turbines and Solar

Now you might wonder, what is the role of sensors and semiconductors in turbines and solar power devices because most of them are made of steel or aluminum? But sensors and semiconductors have a massive role to play in the turbine and solar power industry. Shortage of IC has massively hit this growing industry. Nobody is sure when this supply and demand gap will be covered but one thing is clear: this shortage has resulted in increased electricity prices and has put a massive burden on consumers. 

Other manufacturing industries that got affected by the IC shortage are medical device and military equipment manufacturers. 

What Are the Reasons for IC Shortage? 

There are three major reasons for the IC shortage, such as:

  • Global Automobile Sector 

One of the major culprits for the semiconductors shortage is the auto sector. Modern automobiles, security systems, and computerized panels contain computer chips. Demand for circuit boards in the vehicle sector has also skyrocketed. So, the use of IC by the above-mentioned sectors has mainly caused the IC shortage in the market. 

  • Increased Demand for Electronics 

Another reason for the IC shortage is the increased demand for electronics after the COVID-19 outbreak. As mentioned earlier, companies fail to fulfill consumer demands. Moreover, this increased demand resulted in a shortage of sensors and semiconductors

  • Disturbed Transportation 

During COVID-19 there were various restrictions and transportation was also one of them. Shipping ports were closed and orders were not delivered to manufacturers. 

Challenges Caused by IC Shortage

With rapid technological innovation, semiconductor chips have become an essential part of our daily used items. They’re present in our devices like wireless routers, switches, computers, and other home appliances. As a result of the IC shortage, industries have faced various challenges. 

  • Production is slowed down, halted, or delayed
  • Loss in revenue and profit
  • Increased prices of goods

More importantly, the designers have faced many difficulties. Due to the IC shortage, they have to redesign the project and it takes time and resources. Redesigning and testing can prove costly because everything will be done from the start. 

Another issue is this IC shortage isn’t going to be resolved in the near future. The main reason is the complexities involved in the semiconductor manufacturing process. This shortage will increase the production time of products.

Moreover, switching to a different manufacturer also takes time. The chip design process requires alterations so that it can match the manufacturing process requirements of a new partner. 

What’s the Solution? 

So far we have discussed which industries are affected by IC shortage, what has caused IC shortage, and the challenges caused by the shortage of sensors and semiconductors. Here we’ll provide some best possible solutions to overcome or counter this issue. 

Many manufacturers and chip designers have taken steps to stay in the game and get rid of the chip shortage

  • Chip manufacturers are expanding their production capacity
  • Limit exports and find more suppliers
  • Accommodate older chip technologies (obsolescence management )
  • Strong relationships with vendors and better inventory planning
  • Build efficient AI models by leveraging software solutions like smart compression and compilation. 
  • Companies should increase investment in innovative technologies to develop leading-edge chips. 

Conclusion

The recent IC shortage has had a crushing impact on various industries and automobiles, consumer electronics, LEDs, and renewable energy are majorly affected by this shortage. Despite the mitigation measures, it’s predicted that this shortage will remain till 2023. But the good news is industries can overcome this issue with proper inventory planning and increasing the production of chips. 

Moreover, they can contact PCB design companies like Arshon Technology Inc. for PCB design services. Arshon is the best electronic design company because we can provide the best solutions in a limited time. So, contact us today and get the best PCB design services. 

Author: Anna Mohammadlou IoT Hardware Designer at Arshon Technology Inc.

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