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What Is a Semiconductor, and Why Is There a Shortage?


Semiconductors being manufactured
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They’re everywhere on the tech news nowadays, but what exactly are “semiconductors,” and why is there a shortage of them in 2021? We explain this important material and how its supply can affect all kinds of electronics.

Semiconductors Are What Make Microchips

Chances are you’re reading this article on a computer, whether it’s your phone or a laptop. Nearly every single digital electronic device that you use is running thanks to substances known as semiconductors. These materials, such as silicon, are halfway between conducting and insulating electricity. They’re crucial to creating integrated circuits (ICs), also known as microchips. The terms “semiconductor” and “chip” tend to be used relatively interchangeably in the tech space.

Integrated circuits are built out of an array of circuits placed on top of a semiconductor, and they handle all the processing tasks of most consumer computers. Every PC part—memory, CPU, and graphics card—runs on an integrated chip. That’s why they’re crucial to the production of all your devices.

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Where You’ll Find Semiconductors

Man in sterile suit examining a microchip in a factory
Gorodenkoff/Shutterstock.com

Look around you. Everything that needs to “compute” or “process” any information, be it your Bluetooth earbuds, smart speakers, or Nintendo Switch, has an integrated chip inside it.

For example, semiconductors are present in automobiles. Current cars use an integrated circuit to handle digital display meters, entertainment systems, and more complex features like assisted parking. That’s why auto manufacturers are struggling to finish production on many of their cars right now; the shortage has negatively affected their ability to sell new vehicles on the market as well.

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Other devices that make use of these chips are our everyday appliances. Washing machines use chips to calculate timed spin cycles and saved settings to determine how to wash a specific batch of clothes. Modern refrigerators use chips to power their temperature regulation control or define different temperatures for particular zones. Robot vacuum cleaners have complex artificial intelligence systems that allow them to self-navigate, switch modes, and avoid obstacles.

The Big Shortage

At the time of writing in 2021, we’re in the middle of a massive semiconductor shortage. Many tech enthusiasts first encountered the consequences of the global shortage due to the lack of new graphics cards available for retail consumers, which has caused a severe spike in prices. However, the graphics card shortage is a small piece of the wide-reaching effects of the semiconductor shortage.

There are two main driving factors behind the shortage. The most obvious of these, of course, is the COVID-19 pandemic. Semiconductors, like most products, are made by factories in workers. Because these workers were either prompted to stay at home or were on a limited schedule, for months in the first half of 2020, the production of new chips slowed to crawl. This drastically affected the entire supply chain.

The other factor is the mismatch between supply and demand, which has become even more pronounced due to the rising need for home office devices. It costs a lot of money to create a semiconductor manufacturing plant. And as you’ll see later, the demand for semiconductors across various companies has risen drastically over the last few years. The global chip industry can’t make them quickly enough to meet the rising demand.

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This shortage has affected even the largest technology and manufacturing companies in the world. It’s caused the lack of available Playstation 5 and Xbox Series X consoles, it forced Apple to move the release of their new mobile devices by months, and it’s prompted companies to alter the rate of creation of new products. One of the reasons why Nintendo decided to introduce a new Nintendo Switch with the same internal components was that the shortage made it difficult to source a new set of chips.

What Does It All Mean?

Because of the shortage, all of these things have started to shrink production drastically. Depending on what happens in the next few months, semiconductors could move into more normal production or could get even worse.

According to Reuters, the CEO of chip-making company STMicro believes that chip availability will come back to normal in the first half of 2023. Until then, maybe consider staying with your current devices and holding off on an upgrade.

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