In this digital age, life is heavily dependent on semiconductors of one form or the other. From the time we wake up to the time we retire for the night, we interact with devices that are built around semiconductors: the kitchen that supplies our breakfast has electro-mechanical devices that have semiconductors. such devices could be the microwave oven, the fridge or the blender.
The vehicles that take us to the workplace have semiconductors in their various systems. The lifts or escalators that get us to our workstations use semiconductors. The computers, web conferencing screens, cash registers, factory floor machine panels, airplane and automobile cockpits among others, all use semiconductors. The smartphones, smart watches and headphones that you will notice wherever you turn use semiconductors. The automatic (contactless) water taps whose demand has escalated during the lingering COVID-19 pandemic use semiconductors. Semiconductors are everywhere you turn and take a look.
A transistor is a semiconductor, which is the backbone of integrated circuits (ICs) or microchips. One key role of transistors is to perform electrical switching, which generates 0‘s and 1‘s, depending on whether a transistor is in an “off” or “on” state respectively. These 0‘s and 1‘s are the binary digits (bits) that form the basis of the binary language, which is the language that bare metal electronics understand.
Depending on its purpose, an IC can contain very many transistors, whose number can reach billions, like in the case of a computer’s central processing unit (CPU), commonly referred to as the “processor“.
The trend to make as many “things” as possible “smart” implies integrating ICs (semiconductors) in those “things”. With only a handful of manufacturers globally, the demand for semiconductors has reached the point where it by far exceeds the supply, leading to long delays in fulfilling IC orders.
If the global semiconductor supply chain was one single pipe, it would be a very wide pipe, full to capacity. The semiconductors flowing out of its outlets would, however, be unable to fill up the many hands waiting for them. This is the scenario the world is currently in.
This lingering excess demand for ICs is what is generally referred to as the global semiconductor shortage in current technology and business news, and it has been occasioned by:
- The COVID-19 pandemic, which caused a sudden massive demand for electronic devices to enable people to stay at home and still keep life moving, as the world was placed in lockdown mode. As a result, COVID-19 caused a sudden rise in telecommuting, teleschooling, telemedicine and tele-everthing. Many people also took to social media as a way of spending time while at home. Others saw this as an opportunity to create income-generating activities revolving around social media. As a result, there was a heavy demand for social media content consumption devices like personal computers (PCs), tablets, smartphones, television sets, headphones etcetera. On the other hand, social media content creation devices like digital cameras, smartphones with high-quality cameras, microphones, and PCs for video editing experienced a surge in their demand. The manufacturers of these devices and equipment placed a sudden high demand for semiconductors on a supply chain that was caught unaware. Many organizations have now adopted telecommuting in their operational strategy, which implies the setup of home offices for their staff. Today’s home office is not focused on a physical room, but a cyberspace over which one can communicate and collaborate with workmates electronically. This requires a WiFi router, a PC, a smartphone, and a printer at the minimum, and all these devices are built from semiconductors. For example, it is semiconductors that enable a smartphone or PC to communicate with a printer.
- The rapid technological advancement in the automobile industry. This is noteworthy because the automobile industry is large and is experiencing a rapid technological metamorphosis. This has led to more and more newer motor vehicle models incorporating advanced computer systems with electronics and software components to automate more and more operations. There has also been a trend to adapt more interactive and more responsive user interfaces in automobiles as well as a trend to provide a wider variety of choices and more connectivity to other devices given the rapid growth of the Internet of Things (IoT). Self-driving models are the most advanced in this category, using advanced integrated semiconductor chips for their Artificial Intelligence (AI). The advancement in virtually all automotive systems: the automatic transmission systems, braking systems, power steering systems, various sensors, communication and entertainment media systems among others, all use semiconductors.
- The general technological advancement, which includes the rollout of 5G telecommunication along with communication devices that are 5G telecommunication compatible, coupled with the rapid growth of IoT, is putting more and more semiconductors in an increasing array of devices. For example, the accelerated shift from analog to smart watches which are integrated with smartphones implies semiconductors are required for smart watches etcetera.
The above, among other similar or related factors, have put a heavy demand on the semiconductor supply chain, which so far has not been able to adjust to meet the demand. This has had far-reaching consequences in the supply chain of many enterprise and consumer products that require semiconductors. For example, orders for enterprise ICT equipment like network switches and routers, firewalls, servers, and storage systems have been experiencing an abnormally long estimated time of arrival (ETA) since their manufacturers have to wait in the queue to receive their share of semiconductors. The same
has affected the manufacture of nearly all other products that require semiconductors. This is what organizations that are placing orders for ICT hardware need to understand: they need to plan for a longer lead time to delivery in any of their projects that require new ICT equipment.
It is worth noting that original equipment manufacturers (OEMs) do not manufacture these semiconductors as part of manufacturing their products. Semiconductors are made by a small number or manufacturers globally. The semiconductor industry actually comprises of THREE categories of organizations that either design or manufacture semiconductors as explained below:
- Fabless: These are companies that design semiconductor chips but do not manufacture them
- Foundries: These are companies that manufacture the semiconductor chips using the designs provided by fabless
- Integrated device manufacturers, which are organizations that undertake both the design and manufacture of semiconductor chips. For example, Intel® is an Integrated semiconductor manufacturer.
Your preferred enterprise ICT product OEM is dependent on their semiconductor manufacturer, who determines the lead time to process your order!
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