No relief from semiconductor shortages in 2022
A combination of global risk factors will lead to the supply chain industry taking until 2023, and possibly beyond, to resolve the current electronic component shortage issues.
This is according to global technology intelligence research firm ABI Research’s Technology Trends White Paper that analyses 70 trends that will shape the tech sector in 2022.
Over the past two years, the pandemic has put enormous pressure on supply chains worldwide, amid the increasing demand for a range of products across various sectors, including medical equipment, electronic items, apparel and many consumer packaged goods.
According to the report, 2021 was a tumultuous year for the global ICT sector, full of challenges and opportunities. It states 2022 will continue this trend, with supply chain issues looking set to linger beyond this year.
In the ICT sector there is a significant shortage of electronic components computing products, including the power chips that manage power consumption in mobile phones and semiconductors, which are the essential building blocks used to make computers and gaming consoles.
New COVID-19 variants and the impact on nations without high vaccination rates, political instability, self-imposed mismanagement, trade wars and disruptions in production lines − particularly among businesses with high dependence on China − are among the factors that will play a role in exacerbating supply chain issues.
While electronics manufacturers had hoped the issue would be resolved before the end of 2022, Stuart Carlaw, chief research officer at ABI Research, notes there is no end in sight for global supply chain disruption.
“Although the pandemic has made supply and order volume extremely volatile, it is not the only factor at fault. A combination of factors will take until 2023 to resolve the semiconductor shortage issues: production constraints, verification of real demand versus panic, port congestion, re-shoring efforts and the inflationary impact on consumer spending on products.
“Continued risk factors include social/political risks, such as China/Taiwan relations linked to Apple’s chipmaker Taiwan Semiconductor Manufacturing Company’s (TSMC’s) 53% foundry share and it being only one of two (the other is Samsung) currently producing 5nm products. Another factor is the ability to bring new fab capacity (annual capacity) online, on time, especially for tight engineering on specified automotive and commercial vehicles.”
Scarcity of materials has caused higher prices for an abundance of items, such as cars, computers and mobile phones, notes the report.
Apart from lags in critical processes like production and procurement, there have also been continued scarcities that influence logistics, including packaging, shipping pallets, and other products that are detrimental to transporting goods globally, notes the report.
“In addition, China’s Jiangsu province experienced week-long suspensions in manufacturing from government curbs of electricity due to coal shortages. Multiple fabs are running at 100% or greater, stretching out lead times, but with not enough additive capacity to absorb rising IOT/connected solutions.”
China is the world’s largest manufacturer of mobile phones and computers, exporting billions of dollars’ worth of tech components every year, with Wuhan, known as Optics Valley, supplying a quarter of the world's optical fibre.
Industry insiders previously told ITWeb that supply chain constraints in SA were leading to heavy delays in data centre rollouts and technology refresh cycles at large enterprises.
With the world being dangerously dependent on Taiwan for semiconductors, TSMC recently announced it would spend $40 billion to address the chip shortage by expanding and upgrading its production capacity.