Governments are becoming involved in the problem to help alleviate near-term bottlenecks and adopt policies that safeguard the long-term integrity of semiconductor supply chains to avoid future disruptions.
FREMONT, CA: Although the semiconductor shortage generates short-term challenges for numerous businesses, it is critical not to lose sight of the long-term trends at work. Chips are the new bricks in many ways, with a wide range of industries and products relying on them to provide innovative new features and take advantage of cutting-edge technology. The pandemic exposed the underlying vulnerability of global supply chains, among other things. This is especially true in the semiconductor business, where entrance hurdles are famously high, the technological rivalry is fierce, lead times are enormous, and the power balance heavily favors a few megacorporations.
Like vehicles, personal gadgets, and home appliances, several industries rely on semiconductors for their newest products. Unfortunately, those dependent on an uninterrupted supply chain of semis are suffering due to production backlogs caused by COVID-19's disruptive nature. As a result, governments are becoming involved in the problem, not only to help alleviate near-term bottlenecks but also to adopt policies that safeguard the long-term integrity of semiconductor supply chains to avoid future disruptions.
In 2021, the semiconductor crisis will be felt across a wide range of businesses. The increasing speed of digitization and the rise of disruptive technologies are reflected in current semiconductor demand trends. Governments and corporations are rethinking their reliance on supply chains that pass through other countries as semiconductors become more crucial in a digitalized economy. Companies are criticizing the fabless chip paradigm and its lack of vertical integration, while policymakers seek strategies to encourage breakthroughs in semiconductor research, innovation, and production. We expect to see more investment in chip design and manufacture and efforts to reshore vital components of the chip sector to domestic markets as the importance of innovation for economic growth grows.