It’s pretty hard to imagine a world without microchips.
They’re not just in tech like your phone and computer, but in pretty much every electronic
you’ll encounter today: refrigerators, washing machines, strings of LED lights, electric
toothbrushes, cars, and so much more.
They used to be so easy to get they cost only about a dollar each, but right now they’re
going for as much as 150 bucks a pop because there’s a huge shortage,
a shortage that isn’t entirely
due to the COVID-19 pandemic.
So why are these microchips so useful, and so in-demand?
Well, they’re Moore’s Law made real—tens of billions of transistors packed into a space
about as big as your pinky fingernail.
A transistor is essentially a tiny electrical switch that lets electrons flow when open
or stops them when closed.
These transistors are layered over and around one another on a wafer of silicon to
create a network that functions together as a circuit.
The pattern of electrons flowing through these gates, plus sensors and other stuff, allow
you to communicate with the device.
But these chips are getting smaller and smaller, packed with more and more processing power.
When we’re talking about ten of billions of transistors in the space of a few nanometers,
the manufacturing becomes hugely complicated and time-consuming.
We’re talking cleanrooms with air 10,000 times more filtered than normal room air,
etching the transistors with super precise lasers.
So, a facility capable of producing chips like this costs tens of billions of dollars to
get up and running, so…it's just a little tough.
And during the COVID-19 pandemic, many of those invaluable chip factories had to close,
along with the rest of the world.
But the demand for chips didn’t slow down—in fact, it exploded as devices became our main
way of continuing to work, entertaining ourselves, and connecting with one another.
With this mismatch of supply and demand…chips have become more precious.
But it’s not just the facilities that have been affected—these chips (and the materials
used to make them) also have to be shipped all over the world.
As ports struggle with staff shortages and the bottleneck of goods caused by shutdowns,
getting things from one place to another takes a lot longer and is more expensive than it
used to be.
But the world’s chip shortage can’t only be blamed on the pandemic—this has been
brewing for a while.
Chip manufacturing is dominated by just a few companies in just a few countries.
TSMC, a Taiwanese chip manufacturer, makes 92% of the world’s most sophisticated chips,
60% of the chips used in cars worldwide, and 30% of the simpler chips used in everyday
items.
Now, the US develops and sells the most chips overall,
but the vast majority of the world’s advanced chip manufacturing
happens either in Taiwan or South Korea.
Shortages have occurred in the past when these places have been hit by natural disasters.
So, it was a precarious infrastructure in the first place.
And the number of these manufacturing facilities hasn’t grown as fast as our digital landscape
has: with the launch of 5G technology, more demand for smarter devices, more use
of cloud computing, the move to electric cars... all of this added on to how expensive and difficult
chip factories are to build, and you have a perfect storm for shortage.
And then COVID-19 hit.
The impacts of all this are being felt across all kinds of industries.
Auto companies are rolling out millions less cars in 2022.
Some products from companies like Apple and Playstation are going to be delayed, and consumers
may see less variety on shelves, longer wait times between clicking order and the item
actually arriving, plus potentially larger price tags.
Now, if you’re not in the market for this newer tech, you’re still outta luck.
Older chip technology is actually the hardest to come by.
The industry has been so busy investing in the super complex and fancy chip manufacturing
that older manufacturing equipment has fallen by the wayside, making it harder to keep up
with demand for the chips that go in simpler devices.
It’s not just consumer tech that’s feeling the squeeze, either.
Some of the world’s premiere scientific institutions have also had to delay the launch of the most
powerful supercomputers to date because of…chip shortages.
And experts think it’s gonna be a while before the industry works through the backlog
of orders that’s piled up—like, things might be back to normal in chip world by early
2023…but this is optimistic.
Some experts say it’s unrealistic to expect production to catch up to demand before 2030.
As countries feel the pinch they’re thinking more about investing in domestic chip production
so that outside forces don’t have as much impact on the market.
More factories in more countries with more capabilities are on their way, but like we’ve
said, the science and tech required is not quick’n’easy to implement so...
hence the 2030 prediction.
In the meantime, the factories that are able to produce them are slowly chipping away
at the orders that are still flooding in.
If you want more on Moore’s Law and computer chips, then check out this video here, and
keep coming back to Seeker for all your semiconductor news.
If you have another tech topic you want to see us cover, leave us a comment down below
and as always, don’t forget to subscribe and thanks for watching.
I’ll see ya next time.