There has been a lot said and written about the global chip shortage, but what is this “shortage” and why has it occurred. This article will provide some insight and guidance as to the global chip shortage, providing some background and updates as to why this shortage happened.
What was in short supply?
There was a marked shortage in the electrical components sector that has dragged on since 2017 when the shortage of multilayer ceramic capacitors (MLCCs) made a noted impact on the tech and design sectors. More recently it was the automotive sector that saw the most adverse impact, and this was due to the fact that the MLCCs were required for the production of vehicles to meet the current demand. This issue has now spread and will shortly begin to affect defense electronics, medical devices, and industrial automation.
Why did this cause a chip shortage?
Demand changes and production requirements are always in flux, and in the modern technologically advanced world we wouldn’t expect a tiny component such as the chip to hold up production of high-value vehicles and even state security.
The truth of the matter is that there has simply been a serious increase in production where these are the base components and a change in the demand for capacitors. The cell phone industry for example has seen huge growth over the last few years and as a result, the need for small case capacitors has increased more than ever before.
As cell phones develop, there are now more small capacitors used and with more cell phones and smart handheld devices being used globally, production priorities changed. This however has meant that for many producers, it made more financial sense to produce the easier made smaller, lower-voltage, and lower-performance MLCCs. This then saw a shortage of the larger, high-voltage chips, and industries including military and defense, automotive, and telecom equipment are now in short supply. Products have been said to have a six-month lag time, as the industry as a whole waits for the shortage to be dealt with and production to return to normal.
There is an argument that notes that this was simply poor planning or the conspiracy theorists out there who see the current increase in prices as a cynical pricing war by the chip producers.
The solution is further technological advancement and improved design. There are several alternatives, and it will be imperative to research these alternatives and ensure that your business is able to continue to produce the goods. A great starting place for this research of alternate parts will be on the whole of the market and professional sites such as Octopart.
When is this shortage expected to end?
Until the ceramic chips and capacitors that are required by industry can be made in the numbers that are required, there will be an ongoing supply issue. Producers made strategic decisions based on market analysis and will not be able to simply switch back to producing the required numbers of high-capacity, high-quality, and high-voltage MLCCs. There will be a delay in product release dates and certain vehicles will be delayed.
