About the chip shortage

There has been talk about the shortage of chips in the market for more than a year and providing very different causes for such a phenomenon, including the productive stoppage caused by Covid-19.

After this situation lasting quite a long time, well-informed voices have begun to be heard (in my opinion) indicating that this shortage (which is something real) has more to do with the sudden increase in the use of chips in the market.

Production capacities have not decreased, what has happened is that companies' needs for chips have increased faster than production plants are capable of supplying.

Today are manufactured more chips than ever, what happens is that more are needed than current manufacturers are capable of producing with the means they have. The biggest problem is the short-term increase in the need for products that are not manufactured overnight.

A new chip-making machine takes nearly a year to build and set up. If we multiply that by the total increase in demand, the problem (bottleneck) is served.

According to the SIA (Semiconductor Industry Association) in 2021, more than 550,000 million dollars in semiconductors were invoiced, with an increase of 26% compared to the previous year, and growth expectations remain more than optimistic for the coming years.

And if we think about it a little, this is very logical. More and more "chips" are used in all kinds of products, and these chips are becoming more powerful, requiring more complex machines to manufacture them.

During and after Covid-19, industrialized countries have realized the enormous importance of supply security and that nothing is safer than having a nearby supplier (if possible in your country or near it).

And that sometimes the cheapest can end up being very expensive. Because for any business there is nothing more expensive than not being able to supply the products to its customers.

That said: There are more chips than ever, but there are not enough to supply the growing needs of most manufacturers. And all this situation seems is going to last for some time.