What is happening to electronic chips?

Electronic chips are the miniaturized components that perform the functions of calculation, memory, etc … in commonly used products, which are also called microprocessors in other areas.

And I ask myself the question of what is happening? because there is a great shortage of them in the market and many manufacturers are prevented from manufacturing their products, as has happened in some General Motors plants in the USA, because their suppliers do not have the “chips” necessary to manufacture certain key components that are used in the cars.

I have seen different explanations and I think they are all partial explanations of a much more complex problem.

There are those who say that the Covid-19 pandemic is to blame, which first slowed down the sale of products, with which the chip plants lowered their production and now it takes them quite a few months to raise their production rates again.

Others blame it on 5G, which has generated new needs for new chips in large quantities and the plants that manufacture them cannot cope with this increase while maintaining previous chip productions.

Chip factories are tremendously complex and expensive, using highly sophisticated manufacturing technologies available to very few.

Samsung and TMC are one of the largest in the world with production plants in various countries, with South Korea and Taiwan being the largest chip manufacturers in the world; and now their factories are evolving to 5 nanometer manufacturing technology (the fewer the nanometers the more complex the manufacturing technology is) which is very new and difficult to master.

On the other hand, the prices of the chips are very tight since tens and hundreds of millions of some models are manufactured and the manufacturing companies have endured a long time with the investments they had to achieve some profitability.

To change from one technology to another it can take between 1 and 2 years, and that together with the sudden changes in needs, and the fact that some large companies like Apple have started to manufacture some of their chips, has stirred the market a little more. And in a troubled river, problems for everyone, especially for the little ones.

And “little” could be someone like General Motors who buys a few thousand chips for one of their car models, when Apple or Samsung buy tens of millions for their cell phones or computers.

This is the world of the “big players”, of the biggest companies in the world buying components and pushing to obtain them with the most modern technologies so that their products are smaller, more powerful and consume less.

If to this we add the North American political pressure not to transfer these technologies to China and therefore not be able to manufacture the most modern chips there, we have a salad of problems that all together cause a greater problem, and the consequence is that some do not make it to get the components they need to make their products.

Nobody knows how long this situation will last so each one tries to endure as best he can, but the solution is not immediate.