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Semiconductor Industry Faces Perfect Storm — Earthquake, Covid, Missing Chips, and Suspended Sales

As if the semiconductor industry isn’t already facing enough challenges, the first quarter of 2022 brought the industry a perfect storm of obstacles — including an earthquake in Japan, a Covid bubble in China, missing chips in trucks, and suspended sales in Russia. In fact, the one bright spot in the tsunami of bad news was the continuing effort to provide the U.S. semiconductor industry with $52 billion in subsidies from the U.S. federal government.

Continue reading our quarterly industry roundup on for more semiconductor industry news from the first quarter of 2022.

The modern semiconductor industry began in 1947 with the invention of the point-contact transistor at Bell Laboratories. In the 75 years since then, the semiconductor industry has become one of the most important business sectors in the world economy. It contributes to every major industry, from electronic devices to appliances. 

Today, semiconductor companies are producing more chips than ever — and the demand continues to expand every year. According to the Semiconductor Industry Association (SIA)/Oxford Economics report, “The strong demand for all types of chips facilitates the need for a broader domestic support ecosystem, including manufacturing equipment, materials, design services, testing labs, and R&D activity.”

Semiconductors are the lifeblood of modern technology products. The innovative devices produced by semiconductor companies enable everything from life-saving medical research to increased workplace productivity, green technology, and connectivity among people around the world, according to the Semiconductor Industry Organization. As semiconductors have become smarter, faster, and more efficient, they promise to deliver even more life-improving capabilities — from medical research to workplace productivity.

The U.S. can’t recruit skilled engineers fast enough to meet the demand in microelectronics. China needs 400,000 more semiconductor employees to meet its targets. A whopping 80% of manufacturers say it’s difficult to find qualified workers— and half of those are having extreme difficulty. 

Vegas has been dealing with fake chips for years, but the gambling industry has developed ways to separate the frauds from authentic chips. 

Companies buying semiconductor chips could take a lesson from this playbook, because counterfeit chips are on the rise — with some reporting that the annual losses are in the multiple billions.

Predicting the future is typically a fool’s errand— especially given the way the last few years have played out. However, there are some solid predictions for the semiconductor industry this year that are based on solid evidence from experts in the field. We sought insights from leading sources to share some of the top forecasts for 2022. Among them are semiconductor sales, technology breakthroughs, supply chain status, and labor trends. 

This year on the Talent 101 Semiconductor Blog, we shared articles to try to shed a light on some of the exciting, challenging, and upcoming issues affecting the semiconductor industry. In case you missed anything you’d be interested in reading, or are just joining us recently, here’s some of what we published this year:

As state and local governments ease restrictions and more non-essential businesses can reopen fully, many organizations are developing plans to return to the physical office. But every business’s return-to-work plan will look different. For example, some companies want all their employees to return to the workplace full-time, while others are aiming for a more hybrid and flexible approach. 

Creating the right strategy requires companies to not only think about the needs of the business, but also workers’ preferences. For example, one study reported that nearly 70% of people want to work in the office for most of their workweek. This comes with a major asterisk, however; employees returning to the office want to see changes, including modifications to pre-pandemic density levels and more cleanliness and safety protocols.

In their recent “Digital Leadership Report,” IT staffing provider Harvey Nash Group found that 69% of US  tech leaders say they are unable to keep pace with change because of lack of talent. Harvey Nash CEO Bev White said, “businesses face a triple whammy. They lack the supply of skilled resources they need; they have not yet evolved a new and effective employee value proposition for the hybrid working world; and the needed skills themselves are changing as technology develops at an accelerated pace.”

With this perfect storm of challenges facing today’s operations— a labor shortage, skills gaps, and challenges in trying to scale teams up to meet production demands— organizations are looking for viable solutions to meet goals until they’re able to hire adequate staff. Adopting a lean model may be one helpful way to continue meeting goals during this challenging time.  

Third-quarter news on the global chip shortage crisis is not much better than it was in the first quarter of 2021. In fact, it’s downright brutal. Here are just a few of the recent headlines:

“Global chip shortage ‘is far from over’ as wait times get longer,” said The Wall Street Journal. 

The “semiconductor shortage that has hobbled manufacturing worldwide is getting worse,” announced the Washington Post.

“It will get worse before it gets better,” reports Fitch Solutions.