The dearth of chips first surfaced in the fourth quarter of last year, and is now severely affecting the biggest semiconductor users (opens in new tab) across all industries
The severity of the problem can be gauged from the fact that Dell, which is one of the biggest customers for semiconductor companies with an reported annual order volume of $70 billion, still had to pay a premium to meet its demands.
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Speaking to Germany's Handelsblatt newspaper, Michael Dell talked from his company’s perspective, which is particularly dependent on older and cheaper semiconductors.
"We are talking, in particular, about components that are in the one-dollar range and are used practically everywhere," said Dell adding, "but even newer technologies are not easy to come by."
Tackling the problem
Since it first reared its head, the chip shortage has since been compounded by several factors, including a surge in demand for consumer electronics during the pandemic, even as pandemic-enforced manufacturing unit shutdowns virtually froze the supply of chips.
A severe drought in Taiwan, which forced the country to divert water supply from several industrial areas, including one that is a hub of semiconductor manufacturing, made matters even worse.
Before Dell, CEOs of several other major semiconductor users such as Cisco (opens in new tab), Qualcomm (opens in new tab), and Micron (opens in new tab) have also expressed concern about the longevity of the crisis.
Intel (opens in new tab) sees the crisis as an opportunity to correct an imbalance in the global semiconductor supply chain.
Estimates by the US-based Semiconductor Industry Association say around 75% of global manufacturing capacity is in East Asia, with Taiwan's TSMC and South Korea's Samsung being the dominant players.
To correct that imbalance, new Intel CEO Pat Gelsinger has revealed plans to invest $20 billion in two new chip making factories (opens in new tab) and the company has already started pumping money into upgrading its existing manufacturing facilities (opens in new tab) in the US.
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Via Reuters (opens in new tab)