Semiconductor shortages – which industries have been hardest hit, and why?

14 July 2021

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Goldman Sachs recently listed 169 industries impacted by the global electronic components crisis. Although semiconductor shortages have caused widespread disruption across many sectors, the impact has been far from even. In this week’s Computer Components Ltd (CCL) blog, we look at which industries have been hardest hit, and why.

Automotive

The automotive industry has been particularly hard hit by today’s semiconductors shortage. Ford CEO Jim Farley recently commented that the crisis was, “the greatest supply shock” he has ever seen. Tesla’s Elon Musk commented: “Our biggest challenge is supply chain, especially microcontroller chips.” Analysts are now forecasting that IC shortages could cost the industry as much as $110 billion in revenue during 2021.

As COVID-19 led to lockdowns early last year, demand for consumer electronics skyrocketed, just as purchases of cars slumped. Automakers reacted by cutting down on their supplies of semiconductors used in everything from their vehicles’ infotainment systems to high-end driver-assistance technologies. When car sales bounced back faster than expected, the automotive industry’s purchasing power had been weakened, forcing them further down the queue. At the same time, car manufacturers are at the mercy of a very limited number of largely Asia-based suppliers. Taiwan Semiconductor Manufacturing Company (TSMC), for example,  produces around 80% of the microcontroller units used in cars worldwide.

The impact for the car manufacturing industry has been colossal. Many of today’s new cars use over 3,000 electronic components. These are required for a range of functions from essentials like brakes, steering and battery management to climate control and GPS features. The area of in-car entertainment (ICE), or in-vehicle infotainment (IVI) has been particularly impacted. ICE started with car audio systems and has grown to include video players, USB and Bluetooth connectivity, steering wheel audio controls and hands-free voice control, carputers, in-car internet, and automotive navigation systems.

Several car manufacturers have had to suspend the production of new vehicles due to the lack of semiconductors. Volkswagen, Ford, Fiat, Chrysler, and Nissan have been forced to either adapt or halt production due to the lack of semiconductors.  

PCs, tablets, and smartphones

Last year, the demand for PCs, laptops, tablets and smartphones surged as millions, if not billions, of consumers sought ways to work, learn and stay connected from the safety of their homes during COVID-19 lockdowns and restrictions.

The need to cater for remote working and online learning led to a boom in sales of laptops and PCs. Sales grew at the highest rate since 2010, and shipments of electronic components powering computing systems increased by more than 17% compared to 2019. This rise in demand has continued into 2021 with research firm IDC expecting sales volumes to grow by 18% this year.

However, it’s not all plain sailing for computer manufacturing, as the pain of semiconductor shortages has spread from car manufacturing to consumer electronics. PC manufacturers have experienced significant supply chain issues for almost a year. This spring, Apple reported supply constraints relating to procuring semiconductors for iPads and Macs. While Foxconn, one of Apple's largest suppliers, has warned that it expects a 10% decline in exports due to the global computer chip shortage.

In the mobile phone industry, demand is set to increase significantly this year as vendors shift to selling 5G enabled handsets. IDC predicts a growth of 23.3% in sales of electronic components used for mobile phones during 2021. 

Several major players in telecoms are already struggling to keep up with consumer demand. Following the launch of the Apple iPhone 12 Pro, a three-week waiting time had to be introduced, while Samsung and Xiaomi have predicted delays to their next releases. Major supplier Qualcomm Inc has also announced recently that it has lost out on sales due to electronic component shortages.  

Home appliances

In addition to cars, computers and smartphones, producers of household electronic appliances are also experiencing supply chain delays due to IC shortages. Products powered by simple processors, such as microwaves, have been particularly impacted. LG Electronics, for example, uses 1,000 different types of electronic components across all their home appliances, from washing machines to refrigerators.

Leading home appliance company Electrolux recently announced that its supply chain had been "strained" in several areas, which meant it struggled to meet demand for some products last year. Electrolux has predicted that the situation may worsen in the coming months. 

Gaming

Another area where demand has boomed during COVID-19 has been the gaming sector. The growth in demand for gaming consoles and a recent renewed interest in cryptocurrency mining which relies on graphic processing units (GPUs), also needed for gaming consoles, has led to delays in production.

Semiconductor shortages delayed the release of the PS5, and Xbox Series X last year. In addition, there were supply chain issues for Nvidia’s RTX 3000 series released last year. Advanced Micro Devices (AMD), supplier of semiconductors to both Microsoft and Sony, has also experienced supply chain delays during the first half of this year.

Renewable energies

It appears that the renewable energy sector may be next in line to experience delays due to semiconductor shortages. Although most parts for wind turbines are made of steel or aluminium, sensors and semiconductors are the critical components required to power these devices. Emphase Energy, a major home solar energy system company, recently announced that the semiconductor shortage had undermined its procurement efforts.

Should you sell your excess while prices are high?

Semiconductor shortages across the automotive, computing, home electronics, gaming and renewable energies sectors mean that if you are holding onto any surplus electronic inventory, the value of your obsolete components may be more than you think.

Here at Computer Components Ltd (CCL), we make it easy for our OEM and EMS customers to clear valuable warehouse space and get the best price for their excess stock.

Find out how to turn your surplus electronic components into revenue here.