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15 September 2024

Global Chip Shortage: Everything You Need to Know

Fiona Jackson

The global chip shortage was sparked in early 2020 due to the COVID-19 pandemic. Supply issues continued for over three years, impacting industries such as consumer electronics and artificial intelligence.

Nearly every digital electronic device today is powered by semiconductors, which contain silicon and are critical for creating integrated circuits, also referred to as microchips. And anything that needs to compute or process information, such as smartphones, computers, and even everyday appliances, contains a chip.

Unfortunately, chips aren’t that easy to make — some experts estimate that chips take as long as six months to produce. As a result, chip makers said ending the shortage was difficult “because it takes years to get new factories up and running,” according to the WSJ.

By July 2023, manufacturers had ramped up production and their customers had adjusted to more predictable chip supply. Improvements in production capacity and demand for consumer electronics cooling off have allowed industries like automotive to adapt and recover.

However, export restrictions on key semiconductor materials from China, such as gallium and germanium, have fueled fears that a second chip shortage is on the horizon.

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