Chip Shortage Won't End Until 2024, Says Intel CEO - HotCars

In the world of technology, one component is almost always essential for pretty much every moderately advanced electronic product: a semiconductor, otherwise known as a chip. Without the existence of chips, we wouldn’t have cellphones, laptops, TVs, and - god bless us all, cars.

When the pandemic hit in 2020, an overwhelming amount of global industries were directly or indirectly impacted to the point where many companies went bankrupt, while others were forced to reduce production volume and find ways to cope with decreasing sales numbers. This fate was also true for semiconductor chip manufacturers, which inevitably shook the entire tech industry due to its heavy reliance on third-party chips for the production of countless electronics.

Simultaneously, global demand for chips has been on a steady rise since government restrictions forced people to stay at home more, which in turn resulted in the digitalization of many workspaces and an increase in the demand for electronic home appliances. This only further affected the chip industry, making it even harder for semiconductor manufacturers to meet global demand. Towards the end of April, Pat Gelsinger, CEO of Intel - one of the world’s largest chip producers, told CNBC that he expects the shortage of semiconductors to drag on until 2024. Let’s get into the unfortunate details.

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Reasons Behind The Prolonged Shortage Of Electronic Chips

via: Reuters

The initial cause of chip shortages is the same one that shook the entire world two years ago: the pandemic. The restrictions enforced by governments all around the world to help reduce the impact of the virus provoked a grave sideffect - global business was frozen due to lockdowns, creating a powerful domino effect that generated an international crisis.

Ever since, chip manufacturers haven’t been able to keep up with the increasing demand, and things aren’t looking good even though it's already been more than two years since the pandemic began. Gelsinger told ‘TechCheck’ that the semiconductor industry continues to suffer because there’s a current shortage of equipment that’s vital for the production of electronic chips, which is inevitably limiting the volume at which they can be rolled out to client industries. Right now, Intel is working on a solution that entails investing heavily in new factories in other parts of the globe - this would help diversify production, allowing the company to meet global demand standards. However, this is a process that will take time, hence why Intel’s CEO announced 2024 as a viable date for the chip shortage to end.

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How Does This Affect The Car Industry?

via: Reddit

Semiconductor chips are vital for cars to function correctly, they’re basically miniature brains installed in different parts of the vehicle that take care of different tasks, from electronic steering to parking sensors and climate control systems. Nowadays, with the car industry is as advanced as ever, and vehicles are offering a growing amount of features that require an ever-increasing number of chips. This evolution has now done a full 180 switch, and most brands have been forced to make important changes in order to reduce the number of chips required for each car they make.

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Many of GM's subsidiaries have begun to sell vehicles without many features that consumers have grown to expect of them, and the same can be said of European brands such as BMW and Mercedes-Benz. Other brands have decided to temporarily suspend the production of certain models, so you get the idea of just how grave the situation is.

It’s hard to know exactly when this whole chip shortage chaos will end; 2024 is still a ways away, and who knows what surprises might hit the global industries until then. We can only hope that the car industry somehow survives this crisis without taking too many steps back.