You now know that the lack of chip supply is one of the biggest contributors to the hardware supply chain issue, but what led to it? The answer is similar to why there’s a hardware supply chain problem, there are a variety of factors at play. However, the difference is the lack of manufacturers.
Did you know the United States only produces about 12% of all computer chips in the world? Our country heavily relies on outsourcing for its computer chip needs. Even if the government wanted these US-based factories to ramp up production, they wouldn’t be able to because of facility closures early during the pandemic.
A vast majority of the world’s chips are produced by two companies—Samsung and TSMC. When the pandemic hit, the ports Samsung and TSMC typically use for shipping were shut down. Containers full of chips sat idle, not reaching their destinations. The situation was exacerbated by a buildup of goods and labor shortages as well.
Another untimely problem was extreme weather. Taiwan, where TSMC is headquartered, experienced its worst drought in 50 years. A crucial part of chip manufacturing involves water, and the water shortage greatly hurt TSMC’s output. Additionally, a fire at Renesas Electronics (a Japanese chip maker) destroyed one of the company’s buildings in March of 2021.