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US Feels Effects of Computer Chip Shortage

A shortage of computer chips is affecting the supply chain.

By:  |  October 25, 2021  |    635 Words
GettyImages-1008102560 computer chip

(Photo by Paul Bersebach/Digital First Media/Orange County Register via Getty Images)

The world is seeing shortages of many items due to problems in supply chains. One shortage that has been making the news is that of computer chips – also known as semiconductors.

The shortage of computer chips is affecting industries that rely on electronics. Some items that are expected to be in short supply are smartphones, televisions, games consoles, computers, and cars. Even washing machines and dog grooming equipment contain semiconductors these days!

What Is a Semiconductor?

Semiconductors are used to control the flow of electricity in a device. They are normally made from crystal. Many of the chips are made from sand, which contains a lot of silicon. The sand is purified and melted into cylinders called ingots. The ingots are sliced into thin discs and polished. The discs are printed with tiny circuits that contain electrical information, and cut into tiny chips. These chips are packaged and, finally, used in computers.

According to the Semiconductor Industry Association:

“Semiconductors … are made from pure elements, typically silicon or germanium, or compounds such as gallium arsenide … small amounts of impurities are added to these pure elements, causing large changes in the conductivity of the material.

Due to their role in … electronic devices, semiconductors are an important part of our lives. Imagine life without electronic devices. There would be no smartphones, radios, TVs, computers, video games, or advanced [medical equipment].”

Why Is There a Shortage of Chips?

One reason that there are not enough chips to go around is simply because there is a lot more demand than there used to be. As electronics take over more of our lives, more and more semiconductors are needed to meet the demand.

Semiconductors take a lot of money and expertise to make – so it isn’t an easy business to get into. From design to manufacturing to transport, computer chips have a complex supply chain. This chain is easily affected by problems such as the COVID pandemic. Other issues have caused problems, too. A factory in Texas was shut down during bad winter storms, while in Japan, a fire caused delays at another factory.

China makes about one-third of semiconductors these days. High electricity costs in China, as well as trade disputes, have also affected the computer chip industry.

A Case Study: The Car Industry

The global chip shortage means fewer cars are for sale at new car lots.

North American carmakers cut production of more than a million vehicles because they didn’t have enough computer chips. These chips are used in various ways in cars – from engines to brakes to safety devices. In a nutshell, you can’t make a car without chips these days.

GettyImages-1220163930 Ford dealership

(Photo by: Michael Siluk/Education Images/Universal Images Group via Getty Images)

American auto companies aren’t the only ones affected. French manufacturer Renault said it expects to make 300,000 cars less than planned this year, due to the chip shortage. Overall, the car industry is expected to make 11 million fewer cars this year.

Since there aren’t many cars to sell, dealerships found they had too much staff. Around 70,000 new car salesmen have lost their jobs since the start of the COVID pandemic.

Fewer cars and salesmen have changed car buying. More people are buying cars online, instead of visiting a car lot. New websites have opened to sell vehicles and the pandemic has people more willing to buy over the internet. Many feel there is no need to spend the afternoon with a car salesperson when they can sit at home on their computer and buy the vehicle they want.

Manufacturers of semiconductors – the people who make the chips – aren’t very optimistic about things changing anytime soon and say the shortage could last into 2023.

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