Global Chip Shortage Threatens Industries

The global chip shortage is impacting every industry in a variety of business sectors. Automakers are the hardest hit, so Intel is stepping in to help.

If you haven’t heard by now, there is a global semiconductor chip shortage. Largely pandemic-related, the shortage started when factories were forced to shut down with the rest of the world. This isn’t just a problem for the technology sector, though, the ripple effect of this shortage impacts far more than just the chip manufacturers. Almost everything we use on a daily basis requires a chip, from children’s toys to video game systems to automobiles. The shortage has already resulted in car manufacturer’s cutting back on production, and it doesn’t look like the problem will be solved any time soon.

Chief Executive of Chipmaking for Intel, a U.S.-based chip making giant, said that the shortage is going to take “a couple of years” to abate. Demand continues to soar, the need for chips in all sorts of devices didn’t stop when the world shut down last year. In fact, the need for those devices increased, which is where the strain started because those factories were forced to shut down or limit productivity as part of stay-at-home orders. Meanwhile consumers had an increased need for electronics to work from home or attend virtual school.

As the demand continued to increase, chip makers could no longer keep up, which is how we arrived where we are today. Auto manufacturers are shutting down plants for weeks at a time, reserving their limited supply of chips for vehicles that bring in the most profit. Which means we will see a lot more higher-end vehicles like trucks and SUVs, and less of the rest. Even Apple is limiting its chip usage, causing a dwindling supply of the 21.5-inch iMac. 

There is good news, though. Intel CEO, Pat Gelsinger, said that semiconductor companies can take some short-term steps to alleviate the pain. “We do believe we have the ability to help,” said Gelsinger, who recently took over as CEO of the United States’ largest-by-revenue semiconductor company. But “I think this is a couple of years until you are totally able to address it,” he said. “It just takes a couple of years to build capacity.”

Intel has also been talking to automakers and auto-parts suppliers about how it can help increase automotive chip production in the coming months. Reuters previously reported on this, and the rumors appear to be true. Intel is stepping in to help, their goal is to start delivering extra supply in 6-9 months. “That in no way addresses all of it, but every little bit helps. We can help alleviate some pressure,” said Gelsinger

While this shortage is mostly impacting the auto-industry, as mentioned above, other manufacturers are being impacted as well. Personal computer manufacturers, medical equipment manufacturers and others are all concerned about the semiconductor chip shortage. Chips are in everything, and medical equipment can literally mean life or death, so it’s important that the industry feels as little impact as possible. Which is why it’s good that Intel is providing assistance, hopefully their contributions will shorten the length of time we see this shortage continue.

The full effects of the global shutdown from the pandemic is still not known. Some industries will show a benefit as a result of the shutdown, while other industries have not fared so well. The remote meeting and work industry is booming, the restaurant & cruise industries are not. We have had to learn and adapt to new situations over the last year, proving to ourselves once again that we are survivors. The chip shortage is an obstacle, but it’s one that can be overcome with teamwork and collaboration, something we’ve all learned a lot more about through remote work.

About the Author

Pieter VanIperen, Managing Partner of PWV Consultants, leads a boutique group of industry leaders and influencers from the digital tech, security and design industries that acts as trusted technical partners for many Fortune 500 companies, high-visibility startups, universities, defense agencies, and NGOs. He is a 20-year software engineering veteran, who founded or co-founder several companies. He acts as a trusted advisor and mentor to numerous early stage startups, and has held the titles of software and software security executive, consultant and professor. His expert consulting and advisory work spans several industries in finance, media, medical tech, and defense contracting. Has also authored the highly influential precursor HAZL (jADE) programming language.

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