Global chip shortage hurts tech and automotive industry alike

Due to a persistent shortage of chips and other essential ingredients, some of the world’s largest tech and automotive businesses have had to reduce their goals for this year. Last year, roughly 540 metric tons of neon were consumed globally, primarily in semiconductor fabrication.

Ingas and Cryoin, two Ukrainian enterprises, produce 45% to 54% of the world’s semiconductor-grade neon, which is required for semiconductor lasers. As the Russian invasion progressed, these two Ukrainian suppliers ceased business as the Russian siege deepened. As the semiconductor industry recovers from COVID-related production limitations, this war has raised questions about its capacity to scale up output.

Semiconductors are a vital component of technology that enable an increasing number of items to do activities that they would not otherwise be able to.

Apple CEO Tim Cook warned on Thursday that the company was “not immune” to supply chain issues. He cited “significant supply constraints” in the iPad business during the most recent quarter. It confronts a number of hurdles, including supply issues because of the Covid-19 pandemic, which might further reduce sales by $4 billion to $8 billion.

Nokia CEO Lundmark told CNBC that if not for supply chain challenges, the Finnish telecom would have expanded faster in the past quarter. “The situation has stabilized,” he added, “but it is still quite tight.” China’s curfews are also adding up uncertainties in the short term.

In 2021, the worldwide chip scarcity created havoc on the automotive industry, as many manufacturers struggled to locate the silicon needed to operate systems like cruise control and parking sensors. Automotive businesses, which tend to employ older chips, are nevertheless feeling the effects of the prolonged chip shortage.

Volvo Cars CEO Jim Rowan noted that the company presently does not have enough of a specific chipset. He went on to say that the issue will impact the firm in the second quarter, but that the company has “secured supplies” that will benefit it in the second half of the year.

According to Intel CEO Pat Gelsinger, the chip scarcity, which has had a severe impact on numerous businesses, would last well into 2024. The chip shortage has been an ongoing problem since 2020.

While many semiconductor manufacturers made “advanced preparations” and stockpiled neon, supplies were often only meant to handle modest delays in the short term, and long-term persistent disruptions will continue to affect the semiconductor industry’s capacity to recover.

Prices for neon from non-Ukrainian suppliers have continued to grow, resulting in higher raw material prices. As a result, these incremental price hikes will inevitably find their way into finished items, and their influence on consumers’ wallets will be felt.