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Crisis in the semiconductor market-symptoms, diagnosis and prediction

The media has reported many times, so you must have heard that because of the crisis in the semiconductor market, automakers cannot produce new cars. Hyundai cars are flooded with electronics, but is it really bad enough to stop production? Does the semiconductor crisis only affect the automotive industry, is there no cure or at least a vaccine?

Semiconductor shortage-is it possible?

One of the first symptoms of the semiconductor market crisis is the lack of GPUs. Allegedly, their production has stopped due to a shortage of GPUs. As people become more and more interested in cryptocurrency (the processor built into the graphics card improves the efficiency of cryptocurrency mining software), everyone has explained this situation, but this may not be the only reason. The next alarm is the car manufacturer. At that time, many people rubbed their eyes in surprise-why can’t you make a car because of the lack of semiconductors? This situation is new, although not for everyone.

Elderly people who have been in the electronics industry for decades still remember the days of shortage. For example, the production of music kits stopped due to the delayed delivery of LEDs. Today, this situation was unimaginable before the semiconductor market crisis, but in the past, it was not uncommon for large factories to shut down due to shortages of various small components. On the other hand, the exemplary LED is the main element of the indicator light and the backlight, and affects the aesthetics and functionality of the product. However, this situation is now a thing of the past, and we must have overcome the shortage of production raw materials. Especially if we are talking about the mass production of millions of copies. However, the fact is that if certain types of microcontrollers or GPUs disappear overnight, the production of TVs, tablets, smartphones, cars, high-end home appliances and other consumer devices will be immediately affected because they are the user interface of today important parts of.

In today’s world, with the mass production of components, it is difficult for people to understand the shortage and shortage of semiconductors, that is, when there are huge profits to be made, there is no money to make.


Semiconductor problems-causes

It may not be possible to determine the single cause of the chip shortage, for example, to blame everything on the flu pandemic. The modern economy is global, which means that the situation in one country may have an impact on the situation in another country. The same applies to large market participants or rare commodity suppliers-their legal, political, or technical issues can affect economies around the world.

For example, we saw a rare snowstorm in Texas a few months ago, not only in the semiconductor industry, but also prevented the production of many American companies. A Japanese semiconductor factory was closed for more than a month after the fire. Samsung Electronics Co. has warned that there is a “serious imbalance” in the industry, while Taiwan Semiconductor Manufacturing Co. has stated that even though its factory capacity exceeds 100%, it still cannot keep up with demand.

In addition, it seems that manufacturers who closed their factories during the quarantine period underestimated demand to some extent. Many factories stopped production and employees were forced to take vacations. Reduced demand leads to reduced supply, and it takes time and effort to turn the flywheel again. On the other hand, remote work has increased the demand for tools dedicated to remote work, such as laptops, cameras, tablets, modems, printers, etc. Auto parts factories have been able to switch to the production of parts for consumer electronic products, and the demand for these parts has increased significantly. Therefore, it is not surprising that the parts warehouse is empty when automobile production resumes.

The semiconductor market crisis and chip shortage appear to be mainly due to inaccurate demand forecasts during the 2020 pandemic. At that time, many companies predicted that when the situation becomes difficult, people will start to reduce consumption. However, it turns out that this demand does not contain the new coronavirus. People who were forced to stay at home began to spend money on technology products. They stored better computers and larger monitors to work remotely. They bought a new TV to watch movies or play game consoles. Children must be provided with necessary distance learning equipment. People hoard coffee machines, advanced kitchen robots and other equipment to improve the taste of quarantine life. The epidemic evolved into an online consumer frenzy, supported by special offers from the largest e-commerce companies.


Semiconductor shortage in the automotive industry

The car manufacturer was taken aback. At the beginning of the outbreak, they closed the factory because the exhibition hall was forced to close and the demand fell. The interruption in production slowed the sales of semiconductor chips, which are vital to today’s cars. At the end of last year, demand for automobiles began to grow. People want to move around, but because of the risk of the new coronavirus, they don’t want to use public transportation. Automakers began to reopen factories and began ordering parts from chipmakers such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung (Samsung). Unfortunately, it turns out that these factories cannot meet the needs of automakers fast enough, and the shortage of semiconductors in the auto industry has become a reality.

The silicon wafer production line required for the production of semiconductor components has become a bottleneck. This epidemic has created a huge demand for consumer electronic equipment, so that semiconductor raw material manufacturers cannot provide enough materials, for example, LCD display drivers used in the production of computers, TVs, and game consoles, as well as companies starting to use screens and touch screens. New products, such as refrigerators, heating and air conditioning equipment, audio equipment, etc.

The difficult market situation is not only related to automakers. It is worth noting that many well-known consumer electronics manufacturers have postponed the launch of new products.

It is difficult to say how long this situation will last. On the one hand, the new crown pneumonia vaccination is ongoing and more economic sectors are opening up, but on the other hand, the entire world is facing a severe shortage of raw materials, parts and manpower. In order to save industries and economies, countries are forced to use reserves and/or print money. An extensive economic recovery plan is being implemented. As a result, the inflation rate has risen and the value of the currency has fallen.

When will the semiconductor market stabilize?

We still hope that the business can recover fairly quickly and that electronic component manufacturers can solve the semiconductor shortage problem. Officials say there should be no more supply problems around July/August. But before that?

It seems that a distribution company with inventory in the warehouse may be a solution to this problem. Components Expert is one of them.

Components Expert is a professional distributor of electronic components. We uphold the concept of stable and reliable quality, complete specifications and perfect service system.The products supplied by Components Expert are exported to Europe, America and other countries, and has become supplier designated by well-known factories and companies. In the current state of the semiconductor market, the advantages of stocking niche products have become more valuable.