The ongoing semiconductor shortage shows no signs of easing if a new industry survey is any indication, with a majority of companies planning to extend silicon surpluses into the second half of 2022.
The report, produced by IPC International, revealed that of the companies surveyed, only 10% reported increasing inventories from their suppliers, and about four in five companies surveyed struggled to find the skilled labor they needed to improve production, and half of the respondents reported “extreme problems”.
“The outlook for the next six months is expected to change little,” the report said. “About 65% of companies expect labor costs to rise and only 23 percent expect it to become easier to recruit and find skilled talent.”
The global chip shortage, caused by a perfect storm of increasing demand for new electronic devices of all kinds in 2020 and the disruptions to supply chains and manufacturing facilities caused by the new coronavirus pandemic, has impacted everything from car manufacturing to the latest graphics cards and processors.
To make matters worse, if Ars Technica points out that 90% of respondents have seen their material costs rise in recent months, driving them into the profits of many heavy hitters in various sectors, including an expected loss of revenue of approximately $210 billion for the auto industry in 2021.
Couple that with the difficulty of finding a skilled labor force, which will drive up workers’ wages (probably the only panacea in all of this), which will likely translate to some degree in higher component and material prices.
The chip shortage is here to stay
No one wants to say what is becoming clearer, probably for fear of speaking its name and summoning it in physical form, but let’s face it, the chip shortage isn’t really a shortage anymore. It may turn out to be a system deficiency.
The supply of semiconductors will only increase as new manufacturing capacity comes online in the coming years (Intel, TSMC, and Samsung are all currently building new fab plants), but how much of that new capacity is just production to meet current demand?
And let’s assume that chip companies are able to build up all the manufacturing capacity they need to meet market demand. Who will operate the installations? If half of the chip companies report that they are having “extreme difficulties” in finding the kind of skilled labor they need, who is filling those roles?
Just under half of respondents in the report say they are retraining their workforce to fill these gaps, and nearly as many are raising wages to attract more skilled workers. All that is just to fill current ask about all the devices we have now.
Are we suddenly going to stop building all kinds of new IoT devices and new mobile devices because there are not enough chips yet? No, we will see these new devices grow even more, which will only push the demand for semiconductors beyond the unprecedented level they are at now, the question that chip manufacturers have had to struggle to answer as it is.
It may be time to look at the “beyond” portion of the IPC report’s “2022 and beyond” responses and try to figure out how we will deal with the growing scarcity of this vital technology.