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The Semiconductor Shortage, Explained

This shortage has been one of the largest issues that mankind has ever had to deal with during this technological era we are in. The problem is so bad, in fact, that President Biden has declared that he is going to put over $37 billion dollars into funding for the semiconductors that need support. Everything is going crazy in the tech world right now, and the only way to understand it is to go back to the very beginning to learn about where all of the problems started.

Let’s first talk about what semiconductors actually are. Semiconductors are the businesses that construct electronic parts for other companies to use in their own products. They basically build the components for different products, then sell them to other companies to make a profit. The biggest semiconductors are TSMC (Taiwan Semiconductor Manufacturing Company) and Samsung. These two companies were doing exactly what they had always done (creating parts) until 2020, and the insidious culprit that ruined what we called normal came into the world -- coronavirus.

The coronavirus has resulted in a common trend when talking about businesses. It makes every-day matters more difficult for a business, eventually leading to either the business being sold, or outright going out of business. This trend is what the coronavirus is currently doing to the semiconductor businesses, except for the last part.

Once the coronavirus started spreading to different parts of the world, the semiconductor sales began to decline because the semiconductor businesses didn’t need as many components. Why? Their customers were noticeably decreasing. This left many semiconductor labs stuck with an overload of parts that they couldn’t do anything with, other than to put them in storage -- an unintended result. For about 5 months this downward cycle continued, until around the 3rd quarter of 2020 when sales began to rise again, with the previous cycle seemingly returning to norm.

Despite the apparent return to norm, most of the semiconductors were not ready for this unexpected rebound in sales so soon, leading to many delays in the shipments and even more delays in product announcements. These delays were made even worse due to the large amounts of shipments that companies now expected in order to make up for the lack of yearly shipments during the first half of 2020. Adding to these frustrations, the amount of new products needed during the 3rd quarter inevitably lead to additional new parts that needed to be made. Finally, all of this became a giant issue that wasn’t helped by the fact that the workers simply weren’t able to keep up with the high demand. Everything was already terrible, and it would only get worse from here.

The businesses that were receiving products from the semiconductors also had other issues that just added to the already mounting problems, and these are the problems that really affect the average person who is the end user of the products.

The delay that was caused by the semiconductors hurt the businesses even more because these businesses needed something to put on the market. Without anyone making any parts, the businesses simply couldn’t make products for the public to use. Major companies like Toyota, Apple, Nissan, and many more, big and small, have all experienced this dilemma.

The businesses’ problems have been seen as problems not only for themselves, but they are also problems for the people who buy their products. With the product shortages many people planning to purchase them have either been unable to obtain a product or have paid over double the actual amount for the product because of how rare it has become. These delays have caused people to become very impatient over not knowing whether they would be able to pay a normal price, or whether they could even find the item at all.

These problems have become so vast that even the U.S. Government has become involved in the matter. After some discussion and as mentioned earlier, President Joe Biden has decided to direct $37 billion to build more semiconductor labs in order to help with the overload of orders that are currently being handled by the existing semiconductors. However, even $37 billion might not be enough to make a difference because semiconductor labs require over 5 years of funding for them to be operational. This shows just how serious this has become and how little we are able to do about it.

This shortage is not something that we will just be able to brush off as if it were nothing. This is a real issue that is affecting everyone and is threatening the way we live our lives today. No one knows a real way to stop this problem. So be prepared, because this just might stay awhile.


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