Worldwide chip shortage: background and causes

Many industrial sectors are currently experiencing shortages of microchips and the resulting long delivery times. FHTW expert Peter Rössler explains the background.

At present, problems with the availability of microchips are frequently heard from the automotive industry in particular. Yet many different industries around the world are affected by the chip shortage. Consumers are also feeling the effects of the problem: not only those who want to buy the latest Playstation model are currently having to put up with unusually long delivery times.


The reasons for this are complex and have to do with the increased demand for computer components in the Corona pandemic, but not only. "In the automotive industry, electronics has been the innovation driver for decades, rather than mechanical engineering," says Peter Rössler, head of the bachelor's program in Electronics and Business at UAS Technikum Wien, explaining why this industry in particular is heavily dependent on the availability of microchips. "And you have to keep in mind: we encounter chips everywhere else today, too." Whether computers and smartphones, airplanes or e-bike chargers, televisions, game consoles or washing machines - a multitude of industrial sectors and everyday products do not function without the electronic components. At the FHTW, the Embedded Systems & Cyber-Physical Systems research focus area, also headed by Peter Rössler, deals extensively with the design and development of such embedded computer systems for a wide range of applications, currently for example in a Josef Ressel Center in cooperation with the Austrian companies Elektrobit Austria, Kapsch TrafficCom and Oregano Systems. For students, for example, the Embedded Systems master's program offers opportunities to specialize in this field.

Photo credit: Gorodenkoff - stock.adobe.com

Pandemic boosts demand

In addition to booming demand, the expansion of the 5G mobile network also requires additional chip capacity, Rössler points out. And the growing trade rivalry between the U.S. and China also plays a role in the issue. "Reportedly, Chinese companies bought up massive amounts of chips at the beginning of the pandemic and filled their warehouses." In fact, the digitalization push - driven by home offices and homeschooling - then greatly boosted demand for electronic devices such as laptops and monitors. Sales in the semiconductor industry are forecast by the World Semiconductor Trade Statistics (WSTS) to grow 11 percent this year - twice as fast as before. But while certain sectors boomed, automakers initially had to sharply cut production and cancel chip orders. "When they then ramped up production again, however, they suddenly found themselves at the back of the queue," Rössler said.


Semiconductor industry: complex and expensive manufacturing processes

The problem with the high demand is that microchip manufacturing cannot be cranked up so easily from one day to the next. "Since the late 1960s, an industry with incredibly complex production processes and enormous investment costs has developed here," says Rössler. Not only have computers become smaller and more powerful over the years, but so have the chips needed to make them. U.S. engineer and entrepreneur Gordon Moore, co-founder of Intel, predicted this development back in the 1960s: according to him, the complexity of integrated components doubles every 18 months. "In fact, chips today have structures that are often only a few atomic layers thick," says Rössler. Highly sensitive clean rooms are needed to produce them, making manufacturing facilities enormously expensive and complex. The construction of a semiconductor plant sometimes costs several billion euros. Austrian manufacturer Infineon, for example, invested 1.6 billion euros in its new plant in Villach, according to media reports. "With such investment costs, manufacturers must also utilize their plants to capacity," says Rössler.
Internationally, production facilities in the semiconductor industry have increasingly shifted to the Asian region in recent decades. At the same time, the industry is now highly specialized: Companies like Infineon, for example, produce primarily for the automotive industry and the power electronics sector. However, different processes are required for this than for use in laptops or smartphones, which in turn are often manufactured in Asia, according to the UAS professor.

Waiting further

For all these reasons, creating additional production capacity in Europe is simply not possible in the short term. "Some experts think that the situation will remain like this until 2022 or longer. But in fact, it's very difficult to forecast," Rössler says. The semiconductor industry will certainly respond to booming demand, he adds. "But for the time being, you just need to hold your breath a little longer."

Foto: UAS Technikum Wien/Felix Büchele