The global semiconductor shortage has been an ongoing topic over the past few years, but what exactly are semiconductors and why are they important?
semiconductors refer to the materials used in almost all modern-day computers and are somewhat of a mix between conductors and insulators. Most people don’t give too much thought to what goes into building a computer processor or GPU, but when it comes to the modern world, almost everything is powered by computer chips, and without semiconductors, the world as we know it wouldn’t exist.
Semiconductors are essential to creating electronics since they allow the tech to be reliable, compact, and affordable. Think back to the time when vacuum tubes were used in many electronics – although this worked, semiconductors have enabled devices such as phones, computers, monitors, and more to become much faster and more efficient.
So what makes semiconductors so valuable? At the base level, semiconductors are made up of specific elements such as silicon or chemical compounds like gallium arsenide. Although they are not as conductive as materials like copper, their versatility is what makes them so important to modern electronics. The atomic structure of a semiconductor allows electric currents to alter their conductivity which is important when specific outcomes are desired or when different conductivity levels are needed depending on the situation. Due to their versatility, engineers are able to use semiconductors to create single semiconductor chips with hundreds of millions, if not billions, of transistors, exponentially increasing processing power while remaining compact.
Why Semiconductors Are In Short Supply
There are several reasons behind the global chip shortage, but the biggest one is COVID-19. When the pandemic hit the world, it caused a drop in demand from consumers, but quickly after, the demand shot back up while factories remained shut due to the pandemic. This caused a massive difference between supply and demand. Acquiring raw materials for production also became an issue, due to diminished supply from China and price increases caused by Russia’s invasion of Ukraine. While these shortages have affected companies such as NVIDIA and AMD, even the car industry was affected, with a 16 percent increase in new car prices from December 2020 to August 2022, according to JABIL.
So, will the global semiconductor shortage be solved soon? Unfortunately, it may be well into 2023 before the shortage is addressed and markets go back to normal. This of course is being worked on by world governments trying to prop up more factories and help businesses manufacture more semiconductors and chips through tax subsidies and other government programs. The hard part, of course, is that building a semiconductor factory takes years, but eventually, the semiconductor shortage should become less of a problem.
Next: How Does The COMPETES Act Help Semiconductor Manufacturing?
Source: University of Washington, JABIL