It may be difficult for some people to imagine life without modern conveniences such as computers, phones, cars, televisions, and refrigerators because they have become commodities in society. All the essential equipment is powered by small, imperceptible electronic components called semiconductors. Therefore, if such essential modern technological components become scarce, conflict is inevitable.
Semiconductors are considered the brain of modern electronics. They are a crucial part of electronics and communication technology equipment that enable advancements in a wide range of fields, including computing, communications, healthcare, military systems, transportation, and clean energy.
Semiconductors, also known as integrated circuits (ICs) or microchips, are composed of compounds such as gallium arsenide or pure elements, most commonly silicon or germanium. Small quantities of impurities are added to these pure elements in a procedure known as doping, which results in significant changes in the material's conductivity.
Sensors and semiconductors play a significant part in the daily use of gadgets as they are necessary to produce electrical devices. Today, the application of semiconductors in modern devices ranges from smartphones, radios, TVs, computers, and video games, to sophisticated medical diagnostic tools.
Before the development of the widely used silicon-based chips, computers were large devices with tubes and dials. The quantity of electricity required to operate the computers made them a liability in addition to being fragile.
The tubes were replaced by semiconductor chips, which managed machines more quickly, affordably, and effectively. Modern phones are slim and light, and several industries now use smart equipment due to design and size advancements.
The current global semiconductor shortage serves as a reminder of the importance of semiconductor chips and how vital it is to the modern existence that their production is increased and restored.
Currently, the global semiconductor industry is struggling to keep up with the exponentially increasing demand for chips globally and the limited supply of raw materials for the manufacturing of semiconductors.
Why is there a global shortage of semiconductors?
The semiconductor industry has previously faced shortages, but the one brought on by the pandemic in March 2020 was more severe, especially in Europe and the U.S. The demand for semiconductors decreased, and orders were canceled during the pandemic.
Asian manufacturing slowed down, and many manufacturing facilities shut down as businesses sought to figure out how to function properly in the face of drastically decreased demand.
Automotive firms, who make up a sizeable amount of the semiconductor industry's clientele, chose to cancel their backlog and utilize both their completed goods and semifinished goods inventories to continue their manufacturing activities.
The global semiconductor industry was compelled to operate at a significantly reduced capacity due to weak demand and COVID safety concerns, which resulted in historically low utilization rates.
On the other hand, many businesses and customers hurried to purchase PCs and tablets during the lockdowns and the big transition to working from home, in numbers unseen in many years. Additionally, the fact that schools were closed raised demand for the already limited gaming platforms.
Orders began to increase, and the automobile market began to rebound in September 2020, but the original equipment manufacturers (OEMs) and Tier 1 suppliers had depleted their stock. The supply chain was bare. Companies had lots of orders but no parts, which led to the panic booking of semiconductor chips in advance.
Therefore, it is not unusual that manufacturers find it difficult to keep up with the demand, especially when the pandemic that prompted a global lockdown has highlighted loopholes in the global semiconductor supply chain.
The current semiconductor shortage is fueling several disputes between businesses and powerful nations such as China and the U.S. A few of the latest developments are discussed further in the article.
Amid Global Semiconductor Shortage, Hyundai Motor Group Invests in Korean Startup BOS Semiconductors
On 24 August 2022, Hyundai Motor Group revealed that it had invested in BOS Semiconductors, a Korean fabless startup that creates system-on-chip (SoC) solutions. The companies hope to work together to develop semiconductors for future mobility.
BOS Semiconductors, which was founded at the beginning of 2022, wants to develop into a major global fabless business. It is creating system semiconductors on the foundation of cutting-edge technologies, including high-performance, low-power semiconductors, graphics processors, and high-speed signal interfaces, all of which are necessary for semiconductors used in automobiles.
The group intends to work with numerous chip businesses and continue to look for various automotive-related semiconductor technologies after making this investment to obtain competitive automotive semiconductors.
The group used the second fund of its ZER01NE open innovation platform, which it established in February 2021 with the help of external investors such as the Korea Development Bank and Shinhan Bank.
To assist its future mobility businesses, including enhanced air mobility, eco-friendly vehicles, connected automobiles, artificial intelligence, and robotics, the group plans to use the second fund to proactively invest in promising companies.
MedTech Europe Fights for Semiconductor Prioritization After the U.S. Introduces New Semiconductor Policies
As compared to its counterpart, AdvaMed, in the U.S., MedTech Europe, the European trade association representing the medical technology industries, has been less vocal about the effects of the worldwide semiconductor shortage on the industry it represents. The trade association expressed support for the European Chips Act when it was published earlier in 2022, but it has since concentrated its lobbying efforts on how the new laws will affect the supply of medical devices and in vitro diagnostics.
On 23 July 2022, MedTech Europe made a call for action, claiming that "urgent global and European efforts are needed to safeguard against harm to patients and healthcare systems deriving from the semiconductor scarcity."
The trade group is particularly concerned about the following issues:
• Prioritizing semiconductor allocation to healthcare, both now and in the future
• Transparency in chip allocation
• Increased regulatory flexibility to swiftly incorporate varying semiconductor types
• Incentives to boost semiconductor production and permit end users to redesign medical technologies to use newer generations of semiconductors
To ensure that vital businesses such as medical technology can be given priority during shortages, the trade association is also pushing for public support of semiconductor production, for instance, by paying premiums to semiconductor suppliers to vital industries. Another objective is to raise manufacturing in Europe.
Conclusion
Currently, it is anticipated that there will continue to be a scarcity of semiconductors across all industries until at least 2023. While some manufacturers claim to be back at full production, the majority maintain ongoing shortages.
Government agencies and chip vendors are collaborating to attempt to avert further shortages of this magnitude. Models for just-in-time inventory are being modified by automakers, while businesses are also communicating their immediate and long-term needs with semiconductor vendors more often.
