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Shortages Across the Global Semiconductor Industry

May 29, 2021

Over the last year, the semiconductor industry has seen its share of highs, lows and uncertainties.

In early 2020, the business looked bright, but the IC market dropped amid the Covid-19 pandemic outbreak. Throughout 2020 different countries implemented a number of measures to mitigate the outbreak, such as stay-at-home orders and business closures. Economic turmoil and job losses soon followed.

But by mid-2020, the IC market bounced back, as the stay-at-home economy drove demand for computers, tablets, and TVs. That momentum has carried over into the first part of 2021. 

There are some reasons as below:

Demand for IC chips used in Cloud datacenters and AI clusters was very strong even before the pandemic. COVID-19 increased demand for Cloud services, further accelerating investments into the supporting infrastructure.
COVID-19 shutdowns also boosted demand for PCs and gaming consoles, which rely heavily on complex CPU and GPU chips.

CMOS fabs remained open during the pandemic, but some of the IC packaging facilities had to shut down in April-May 2020. This contributed to concerns about disruptions in the supply chain, forcing many customers to increase the size of their orders in an effort to create inventory reserves.

US sanctions against Huawei, which were announced in May and scheduled to start in September 2020, prompted Huawei and other Chinese companies to create inventory reserves as well.

In July 2020, Intel reported delays with its introduction of chips based on 10nm and 7nm CMOS technologies and outlined plans to outsource more of its chip production to TSMC.

By October 2020, the industry supply chain was running red hot. This is when the auto industry was caught off guard by a surge in consumer demand.