To make it simple to understand, Silicon is the principal ingredient found in beach sand, and is a natural semiconductor. We often wonder how the shortage of silicon chips is affecting the automotive industry. Here is why, silicon is purified, melted, and cooled to form an ingot to make wafers, and that is why these chips are called silicon chips.
The chips are used in manufacturing of every modern car. It is estimated that around 3000 tiny chips are used to make an Electric Vehicle (EV) performable. Not only cars but there are many other technologies which run on these chips such as gaming consoles, home appliances, smart phones, computers, etc.
The deman
d of Silicone chips has been increased after the pandemic and it is quite impossible to fulfill the gap between demand and supply in such a short period of time. In 2021, a storm in Texas temporarily forced the shutdown of the three big semiconductor manufacturers, whereas TSMC (Taiwan Semiconductor Manufacturing Company) is in the midst of a dry period since the industries need a massive amount of very pure water to function. Despite the crises, the companies remained profitable because they demanded high prices for the chips, and the major suppliers of these chips have warned that the shortage will continue throughout the year or potentially beyond.
Why the supply and demand got misbalanced is mainly because of the Covid 19 pandemic. During the pandemic, consumer’s demand for cars declined, and many employees were asked to work from home, which increased the demand for computers, smart phones and tablets. Therefore, the manufacturers of these chips shifted their interests from cars to other areas which resulted in much demand and lesser supply. Since then, not a single industry has been able to escape the worldwide shortage of the semiconductor chips. Here we discuss the importance of Silicone chips in different industries and technologies so that you can understand the basic importance and why did it go short on supply.
Automotive Industry
The pandemic is not over yet but the companies have started their operations back from workplaces. Everything is almost back to normal, and so is the consumer’s demand for automobiles, but one thing that was not ready to go back to normal was the supply of the Silicone chips. The Manufacturers were not ready for this, and therefore there has been a huge gap between the demand and supply, which has created a shortage of chips.
Due to the shortage of chips, some auto manufacturers, such as Peugeot has decided to make cars with less chips by replacing some latest features with the old ones, like digital speedometer into Analog speedometer. In such a crucial situation, the well-known brand Mercedes has decided to use their reserved chips in expensive models only which results in more expensive cars.
When it comes to Toyota’s Land Cruiser, they have launched their new super luxury SUV this year but they are also unable to produce cars at large scale at this time which means more expensive cars and lesser supply. The company has been taking pre-orders from the customers and the delivery times are 3 to 4 years in the future. The Silicone chips are a very important element when it comes to the automotive industry and due to the shortage the companies are unable to mass produce latest and more advanced cars. In simpler words, the world has advanced and the demand has increased, but the suppliers were not ready for this demand.
Smart Phones
Similar to the automotive industry, the global Silicone chip shortage may also affect the big smart phone brands such as Apple Inc. Chips that are used in Apple’s iPhone, iPad and iMac are manufactured by TSMC (Taiwan Semiconductor Manufacturing Company) which is already facing the high demand of chips, so due to this situation even Apple had to cut down their production. They had planned to make 10 million fewer iPhone 13 models because of the shortage of chips in 2021, which is why we see so much hike in the prices as well.
Samsung is also struggling in mass production of advance products like their flagship phones and smart TVs. Even though Apple and Samsung both have different Silicone chip providers, yet the two major cellphone companies are struggling to meet the consumer demands at large scale.
Besides, according to one recent report, the automobile industry will lose $210 billion in revenue because of the lack of silicon chips. If you are interested more to learn about it, you will find more about the topic in the news. There are several shows where you can get daily updates about the topic. A TV service that allows you to watch local news on your fingertips is TDS TV. It is affordable and allows you to watch on demand content. You get your personalized content in one place which keeps you up to date with the latest news be it sports, entertainment, current affairs, or tech news.
Gaming Consoles and Graphics Cards
Apart from automobile industry and the smart phone brands, another industry that is facing trouble to the shortage is the video game industry. Videogame consoles and smarts phones are being affected, and gamers are struggling to get their hands on new PS5 and Xbox. Microsoft Xbox series x and Sony PlayStation 5 were the most awaited gaming consoles for gamers, and the rivals have been trying to produce their consoles at large scales to cater the demand but it is just not happening to them due to the shortage. In a new report by Bloomberg, the publication writes that Toshiba Corporation, one of the major companies that manufactures silicon chips that are used in graphics cards, gaming consoles, and more, says the shortage will likely continue till the year 2023.
While these are just a few examples of how the shortage has affected major industries today, we must not lose hope. Well, it is not entirely impossible to fill the gap, as it is hoped that the crises will be over once the demand of chips will be fulfilled by the companies. The situation is likely to be resolved in the near future, as the semiconductor manufacturers are shifting their manufacturing plants to other areas in order to maximize their production that will somehow help them meet the demand of Auto Manufacture industries.
