Global Chip Shortage

The Global Chip Shortage

Many customers are exasperated at the long lead times being quoted for industrial automation equipment, but what are the real reasons for the shortage of these parts. As automation parts have become more complex, most of these parts have some form of semiconductor implanted in them in order for them to function correctly. The global pandemic that was Covid played a prominent role in the shortage of supply of these semiconductors as most companies closed factories down on government orders to prevent the spread of the infection. The process of manufacturing silicone chips involves the use of a range of chemicals and different components, and it only takes a shortage of one of these in the supply chain to have a substantial negative effect in the production of these parts. One of the results of the pandemic was the shift to home working, which resulted in an exponential increase demand for consumer electronics which only led to less chips being available for the industrial sector which were currently closed.

Silicone chip manufactures have responded to the challenge by expanding current manufacturing plant, whilst also building new facilities to increase production to meet demand, but the new facilities will not be online for at least 3 years, whist the existing facilities should start production after 18 months.

So all in all, it was the perfect storm that created shortage of supply of silicone chips, but by the end of 2023 we should hopefully return to normality.