The sudden demand explosion for certain industries like smartphones and PCs resulted in unprecedented global shortage amidst Covid 19 pandemic.
FREMONT, CA: Lowly chip which was invented six decades earlier has gone from incomprehensible workshop in potential computers to the most vital and expensive component under the hood of modern-day gadgets. For certain industries like smartphones and PCs, this sudden demand explosion has unexpectedly boosted amidst the Covid 19 pandemic which has caused a near-term supply shock that has triggered an unprecedented global shortage. According to the industry distributor data from Susquehanna Financial Group, in February, for the first time since data collection started in 2017, the lead times duration between placing an order for the chip and the fulfillment of the order was stretched to 15 weeks on average. Similarly, the lead times for Broadcom Inc - a barometer for the industry - due to its involvement across the supply chain, extended up from 12 weeks in February 2020, to 22 weeks.
Politicians from Washington to Beijing have been swayed by the crunch into crisis control and have sideswiped the General Motors and Volkswagens of the world. Moreover, it also launched the Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. as the top of investor and government agendas.
Asia's two largest chipmakers do not possess the ability to satisfy all demand even though they have the responsibility for making the vast majority of the world's most advanced silicon. This is the demerit that is expected to last several quarters in the coming years. In recent weeks, a growing number of industry players from Continental AG to Innolux Corp. and Renesas Electronics Corp. have been warned regarding having a lengthy anticipating period for deficits snarling productions. Even one of the largest companies in the sector, Samsung, has flagged a serious imbalance globally to warn of fallout from the crunch.