Introduction

In December 2021, the Semiconductor Industry Association (SIA) announced USD 48.8 billion worth of worldwide chip sales for October 2021, indicating an approximate market size of USD 600 billion per year. This was an increase of 24.0% over the USD 39.4 billion global sales during for October 2020, and about 1.1% more than the September 2021 total of USD 48.3 billion.

SIA represents about 98% of the US semiconductor industry by revenue, and nearly 67% of all non-US chip firms.

However, this is just one aspect of the on-ground reality.

Since the onset of the global COVID-19 pandemic in late 2019/early 2020, we have become intimately acquainted with two of the most sought after commodities in recent times – vaccines and semiconductors. Two years in, while vaccine supply appears to have caught up with global demand, the supply of the silicon chips that power all devices today – from phones, to computers, to cars – seems to be lagging behind.

It is therefore no surprise that the prices of smartphones, laptops, gaming consoles, desktop computers, televisions, and all other electronic devices continues to rise as a direct result of the global shortages. And all this is in addition to the US 210 billion in lost revenues projected for major auto makers in 2021 from the worldwide semiconductor supply shortfall .

The SIA notes that although the large semiconductor manufacturing companies are now investing significant sums to boost capacity, with several new plants planned for the US and Europe, given the level of sophistication and complexities in the chip manufacturing process, a full recovery and stabilization of the global chip supply will at least take a couple of more years .

In this paper, we try and uncover the background to the global chip shortages and identify ways to reduce its impact on your business.