Since 2020, there has been a global electronic chip shortage due to low production and high demand. This unfortunate event has affected many people across the globe, whether they know it or not. 

Computer chips are the powerhouse of all of our electronic products; without them, they simply could not function. 

Devices such as RFID Tags (ID Cards), cell phones, home appliances, RAM chips, and especially automobiles, all use electronic chips.

There are multiple factors that could be affecting the number of chips produced. What are the possible causes of this global chip shortage? According to TechRepublic, the start of this could be traced back to the automotive industry. During the COVID-19 pandemic in early 2020, the overall consumer demand for automobiles took a steep decline during lockdown, causing the chip manufacturers to look towards something else for business. 

Seeing the reliance on electronics during the lockdown, that is what manufacturers decided to put the chips towards. As things like 5G grew, devices required better and more chip components, overspending their supply. 

Another possible cause for the crisis, as an article on Schneider Downs explains, could be due to high and severe weather. The high winter weather in eastern countries forced a lot of semiconductor production lines to shut down. Japan also experienced difficulty as a fire broke out in their Renesas plant, where one-third of global car chips are produced. Japan and China are also competing against each other in an ongoing trade war, halting a lot of the distribution of products to other countries. 

Seeing the supply of computer chips dwindling, individuals and even businesses began to try to find a way to make money off of this whole predicament. Businesses saw the high demand and raised their prices, knowing that people will buy and make them more money. Individuals and ‘consumers’ saw the high demand and low supply and began to buy and then scalp the items for profit, a lot of businesses not worrying about scalpers because, in the long run, they are making money off of them. 

As the pandemic began to release its hold and automotive sales began to grow, so did the price. Manufacturers computer chips and semiconductors were too busy with everything else to realize. This caused vehicles, especially trucks, to take a huge price increase as the parts and computer chips to make them were more limited and expensive. 

Recently as of August 2022, as told in a Fierce Electronics article, there was an Act passed known as the CHIPS Act. Hoping to try to push this situation on the right track the Act passed provided $52 billion in grants and subsidies for new fabs (Microchip Fabrication Plant), with seven major semiconductor companies planning to build $200 billion in fabs in the coming years.