supply chain management a global crisis of chip shortage PDF

NADIYA YUSUF
STUDENT ID . 1906005
BE260:
SUPPLY CHAIN MANGEMENT
A GLOBAL CRISIS OF CHIP SHORTAGE

1. Introduction
It is well known that mobile phones and computers cannot be manufactured without the use
of chips which we use in our Morden lives and from this, there was a boost in demand of
those electronics, However, "chips shortages" tendencies began in the automobile industry in
the second half of 2020 during the height of the pandemic and progressively spread to other
industries. Generally, electrical gadgets, ranging from phones to your computer to your
automobile, require hundreds of chips.
As a result of both COVID-19 and trade frictions, the industrial chain's long-standing supply
and demand balance between upstream chip suppliers and downstream electronic makers has
been disrupted. The global chip problem results from several distinct circumstances, the
biggest one being the snowball effect of the COVID-19 epidemic. Other possible causes
include the China–United States trade war and Taiwan's 2021 drought. According to an
article published by Inews (Alex-finnis, 2021), owing to covid Globally, restrictions have
compelled a huge number of people to work from home. This increased computer sales – up
11% year over year – boosting demand for chips. As demand increased, supply decreased.
Due to social distancing regulations, factories were required to operate at decreased capacity.
"What we did with those laptops also contributed to the delay," Dr Suresh Venkatesan, CEO
of POET Technologies, which produces photonics and optoelectronics for the data centre and
telecommunications businesses, told Forbes. More individuals now own routers and
broadband, which means they consume more bandwidth for Zoom calls, FaceTime
conversations, and streaming other forms of entertainment. This resulted in a disruption in
supply and an increase in demand, both of which result in depleted inventories across the
sector." The semiconductor scarcity has impacted industries other than automotive, with other
industrial firms unable to get chips. This demonstrates the vulnerability of such supply
chains, which rely heavily on Asia as a semiconductor manufacturing hub. Numerous
manufacturers are already in crisis mode, and few see a quick resolution. Automakers and
chipmakers alike will need to collaborate to address the demand mismatch. This essay
assignment will discuss how the scarcity occurred and what transpired.
2.1 Review of the reasons for the chips shortage in the electronic industry
and their competitive strategy in the global market

As the world shut down in view of the COVID-19 pandemic, numerous industrial facilities
shut with it, making the provisions required for chip producing inaccessible for a really long
time. Expanded interest in customer hardware caused shifts that undulated up the production
network. Orders started to stack up as producers attempted to make sufficient chips to meet
the new degrees of interest. An accumulation started to grow and grow. The current demand
for chips is incredible that manufacturers can't make sufficient chips to meet it as of now,
which means buyers will before long be seeing more exorbitant costs for fewer products, As
Dr Abhisek Dixit, Professor in the Department of Electrical Engineering, Indian Institute of
Technology – Delhi, clarified, (Bhatia, 2021) "The consumption of integrated circuits in
products is ever increasing and a large manufacturing sector for these kinds of integrated
circuits are a part of the supply chain."
While lean stock practices save organisations the expenses of storing and keeping up
with inventories of fundamental items and materials, they leave organisations in danger. The
worldwide deficiency of semiconductors is only one illustration of the risks of lean
production network the board. The events of 2020 have clarified that a nimble production
network with worked in versatility is fundamental for assembling and exchange. The
opportunity has arrived for a store network change. Accordingly, an enormous number of
fabs and bundling and testing plants had to diminish their creation scale. Obviously,
exploring future disturbances requires a more comprehensive and proactive strategy, one that
requires nearer cooperation among providers and their clients than previously (Hanbury and
Hoecker, 2021). For example,
• Creating a segmented marketing plan.
• Instilling smart resilience in employees
• Collaborating with partners at all levels of the supply chain
2.2 how suppliers find the way around the global chip shortage
the semiconductor lack results from a blast of interest despite reliable inventory. Regardless
of the pandemic, interest for capital gear depending on semiconductors has broken out of an
almost twenty-year sleep. In short — expanded interest drove expanded capacity's tech
monsters like Samsung Electronics Co. Intel Corp. is delivering regulator contributes in-
house. Nevertheless, most chipmakers re-appropriate the production to foundries such as