CAUSES OF IC SHORTAGE

Before the incredible invention of IC technology, people needed a more reliable and easy way to accomplish their tasks. So, to turn the proverb, that is, necessity is the mother of invention, into reality, IC tech was the practical solution to their problems. But, regardless of its significance, IC tech faced significant setbacks in the 1980s, 1990s, and early 21st century.

IC failure in the past

The failure to maintain the balance between demand and supply, needless to say, gives rise to colossal business damage. The IC shortage in 1988 and 1994 was mainly due to unable to meet the high needs and shift towards new technologies, respectively, causing chip famine. Similarly, in 2004 and 2011, there was a severe chips shortage, particularly CDMA, lack of facilities, and NAND reduction, respectively.

Major Cause: COVID 19

COVID 19 is the primary and the pressing cause of the IC shortage. No doubt, COVID 19, an ongoing global pandemic, impacted almost every sphere of life. IC tech is not exempt from its negative impacts. Due to nationwide lockdown and suspension of major business activities, imbalance in demand and supply chain is obvious. Moreover, a lack of interest in investing in new and advanced technologies is hampering the effective growth of IC technology. Since the outbreak of this novel virus, it forced many companies to put a brake on manufacturing and selling.

Tech Cold War between USA and China

A trade war between a superpower and the rising global economy proved a disaster. The hegemonic role of the USA is sometimes not wise and effective for other nations. For instance, in 2020, to counter her rival country China, the US government put restrictions on SMIC (Semiconductor Manufacturing International Corporation), China's biggest chip manufacturer. These sanctions do not allow other countries to keep any trade relations with China. That was a heavy setback for the Chinese economy.  Nobody is untouchable in this tech world. In the past, the US government placed lots of sanctions to become self-reliant and get semiconductor supremacy. Needless to say, its effects are across the globe.

Role of stockpiling

With every company that uses chips in production panic buying to shore up stocks, the shortage has squeezed capacity. It has increased the costs of even the cheapest components of nearly all microchips of final products. China also stockpiled chips for the last two years.

Double bookings cause a shortage

The shortage of chips, brains behind every electronic device, was worst due to double booking. Double booking is responsible for an imbalance in demand and supply chain, which ultimately cause scarcity of chip. 

Conclusion

In the end, a microchip is very small visually but is the mastermind of each and every electronic device. The inevitable causes of shortage may be man-made or natural but changing, with the constant shift towards high tech, is a wise step.