There Aren’t Enough Chips — Why Are They So Hard to Make? (2024)

FAQs

There Aren’t Enough Chips — Why Are They So Hard to Make? ›

Chip makers say ending the shortage is difficult because it takes years to get new factories up and running. Even a single speck of dust can damage a chip.

The foremost challenge in high-end semiconductor manufacturing is precision at an astonishing scale. These chips incorporate transistors that can be as small as a few nanometers wide. To put this into perspective, a human hair is approximately 80,000 nanometers in diameter.

Though the shortage took center stage in 2022, supply chain issues began in 2021 during the tail end of the COVID-19 pandemic. The inability to meet orders with the existing supply worsened, and demand only continued to increase. The semiconductor industry is cyclical, and shortages are not uncommon.

Solutions to the Semiconductor Shortage

One solution is to increase investment in semiconductor manufacturing capacity. This could involve building new factories, expanding existing ones, or investing in research and development to improve production efficiency.

It's about 30 percent more expensive with no government support to build a chip factory in the U.S. as it is abroad because of the subsidies and other factors. So they're trying to basically even it out, so if you're Intel, it's essentially neutral as to where you build your plant. What exactly are semiconductor chips?

Some chip shortages could remain through 2023 and into 2024, though supply of semiconductors and raw materials will generally improve in the auto sector. The auto sector can expect a strong year in 2023, with global car production up 3%. As semiconductor supply returns, global auto pricing should remain stable.

Geopolitical tensions between China and the United States have had a significant impact on the semiconductor industry. The U.S. has imposed export controls and sanctions on Chinese semiconductor-related companies, limiting their access to certain technologies and components.

A chip shortage may emerge in 2024

At the same time, the semiconductor industry is getting a major boost from artificial intelligence (AI), as the demand for chips deployed in AI servers is going through the roof.

After a year of supply shortages and climbing borrowing costs, 2024 is shaping up to be a better time to buy a car.

However, with all the semiconductor capacity being taken by AI and next-generation products, markets such as defence and aerospace will see the semiconductors they use being made obsolete as their demand is less than AI.

How can we stop semiconductor shortage? ›

To mitigate the chip shortage, companies are exploring strategies such as onshoring or nearshoring. The United States' CHIPS Act, passed in mid-2022, has led to a multibillion-dollar investment pool to bolster the country's semiconductor manufacturing capabilities and reduce reliance on foreign foundries.

In July 2022, MIT News announced that cubic boron arsenide could be a possible alternative to silicon. Cubic boron arsenide performs better than silicon at conducting heat and electricity.

As of March 4, 2024, Nvidia was the largest semiconductor company of United States origin in terms of market capitalization, amounting to 2.12 trillion U.S. dollars. Broadcom ranked second with a market cap of 659.4 billion U.S. dollars, followed by the likes of AMD, Intel, and Qualcomm.

China's national champions for computer chip – or semiconductor – design and manufacturing, HiSilicon and Semiconductor Manufacturing International Corporation (SMIC), are making waves in Washington. SMIC was long considered a laggard.

The microchip manufacturing process involves hundreds of steps and can take up to four months from design to mass production. In the cleanrooms of the chipmakers' fabs (fabrication facilities), air quality and temperature are kept tightly controlled as robots transport their precious wafers from machine to machine.

In IT-parlance, a semiconductor or chip is the wafer thin slice of material which forms the base for an integrated circuit. Producing it is a highly complex task that can broadly be divided into three phases: Design, IC fabrication and Assembly.

In the quest for the perfect chip, everything that follows after choice of potatoes has to do with fine-tuning this crust-and-steam process. Most cooks and food scientists agree that the best chips are fried twice: first at a relatively low temperature, then at high heat, which is the go-round when the crust forms.

Potatoes and their processed products such as chips and snacks are a few items that may face shortages or disappear totally from grocery store shelves this year, due to United States' inflation that has already reached a four-decade high.