How is The Semiconductor Industry Dealing with The Worldwide Chip Shortage in 2022?

COVID-19 has caused a lot of havoc to humans, businesses, and society at large. Various businesses and industries feel the impact of this deadly virus. The automotive industry, in particular, is feeling most of the heat.

In fact, the coronavirus pandemic has caused some automakers to shut down or halt car production. In 2022, while most people have moved on and businesses returned to normal, many industries especially the automotive industry is still affected by semiconductor chip shortages.

While automakers are sourcing an alternative, the chip shortage won’t be resolved immediately. In this post, we discuss how the semiconductor industry is dealing with global chip shortages in 2022.

Despite the shortage, the semiconductor industry remains highly profitable.

Semiconductors or chips have gained massive popularity in recent years not because they are discoveries, but because the world is just beginning to see their importance. Today, people are beginning to realize they are living in a semiconductor world.

For starters, semiconductors are tiny chips that enable so many different functions in electronic devices such as laptops, smartphones, radios, speakers, vehicles and more.

From detecting blind spots to lighting and seat control, semiconductors make up the vital components of a car. When the global semiconductor supply chain was disrupted, giant car manufacturers began to realize the depth of the mess they found themselves in.

As chips are the most sought-after components in a car and many other electronic devices, the semiconductor industry has experienced a quantum leap in its revenue: a 4% increase between 2019 and 2021, the highest so far.

What Led to Chip Shortages?

Before we proffer a solution, it is important to know what led to the current dilemma. The global semiconductor shortage is caused by a confluence of problems – the first being an increase in demand in the electronic industry.

Since car manufacturers halted the production of cars during the pandemic, chip manufacturers experience excess production. As such, they needed to shift supply to meet the demand for other applications.

Recall that this was the time people stayed at home and only electronic devices, components, and gadgets kept the human race entertained and in touch. From watching television to working at home on laptops, playing video games, and accessing social media via smartphones, people found ways to keep themselves busy at home.

All of these electronic devices and gadgets need semiconductors. It only makes sense for semiconductor manufacturers to shift supply from the automotive industry to the electronic industry. In this situation, the revenue growth for semiconductor manufacturers increased from 5% recorded in 2019 to 9% in 2021.

Now that things are restored to normalcy after the peak of the COVID-19 pandemic, auto manufacturers can no longer get enough chips for producing cars.

There is no quick fix to chip shortages due to the complexities of semiconductor production.

Semiconductor manufacturers found it easy to switch supply to the electronic industry but will not find it easy to resolve chip shortages shortly.

This is partly because of the complexities of the semiconductor production process. While some governments are upping their investment in semiconductor technology to reduce the impact of global supply-chain disruptions, it can take an established semiconductor manufacturing company at least four months to produce chips not to mention a newcomer.

Sometimes, it can take up to six months. No exaggerations. Switching to a new chip manufacturer does not seem to be an option either as it may take up to one year due to several factors, including licensing, chip modification, and design implementation to suit the specific manufacturing processes of the new partner.

The Stakes are High!

Now that we’ve known what caused chip shortages it is time to learn what lies ahead for the semiconductor sector and the significant economic value that it generates. Increasing production capacity will do a lot of good for the semiconductor industries.

At the same time, chip manufacturers are looking for new technology and equipment to meet increasing growth in customer demands and production. In fact, many semiconductor manufacturers are considering AOI Machines (automated optional inspection or automated visual inspection) as a way to boost production and quality.

Indeed, due to the global shortage of semiconductors, the adoption of Automated Optical Inspection (AOI solutions) has increased in recent years. High-performance wafer AOI solutions can help chip production as it automatically detects minor and major wafer defects while providing reliable and precise results.

It supports various types of wafers in semiconductor defect inspection and many industries such as automotive, electronics, medical and optoelectronic. The decision to use AOI machines could have enormous economic significance, both for their industry and the economy as a whole.

In Closing: The Crucial Next Steps for Semiconductor Manufacturers