Automobile companies are halting production because their vendors can’t supply electronic components. Laptops manufactures are struggling to meet demand because they don’t have computer chips. Mobile phone companies have to pay through the roof to critical source parts. And it’s all happening because the world is witnessing an unprecedented semiconductor shortage.

What is Semiconductor?

Semiconductors are materials with conductivity intermediate between conductors and insulators. It is frequently known as the integrated circuits (ICs) or microchips. Usually made of silicon, and are used to power a broad range of devices, including automobiles, laptop computers, cellphones, home appliances, and game consoles. Semiconductors play an essential role in our lives since it is available in the manufacturing of electrical gadgets.  These tiny devices perform a variety of tasks, including powering screens and transmitting data. Consider a world without electrical appliances, and there would be no radios, televisions, computers, video games, or adequate medical diagnostic equipment.

Why is the world witnessing an unprecedented semiconductor shortage?

During the pandemic, most people worldwide started working from home, which increased the demand for electronic gadgets. Also, people started preferring personal vehicles over public transport. These led to significant demand for semiconductors. The pandemic-infused lockdowns forced the closure of critical chip-making facilities in Japan, South Korea, China, and the United States. Moreover, Tense relationships between the United States and China are also a concern since the United States government has blocked Huawei, which supplied semiconductors to American companies.

Expanding manufacturing capacity in the middle of a pandemic isn’t exactly straightforward. As manufacturing chips is a complicated process, chip production generally takes more than three months. It requires massive factories, dust-free rooms, multi-million dollar equipment, molten tin, and lasers. The unexpected scenario is not likely to change very soon, and the supply shortages issue to persist in the near term. The semiconductor shortage is pulling multiple industries to its knees, and now you know why. I hope you found this article helpful. Continue to learn and Happy Investing. To know more related to stock Trading write us at investmentz@acm.co.in