The Covid-19 pandemic and growing electronics demand caused global chip shortages. Consumers and organizations began purchasing new laptops and servers to accommodate remote employees and home-schooled children. Thus, although global semiconductor sales decreased between 2018 and 2019, they increased by 6.5 percent in 2020. In February 2022, global semiconductor sales reached $52.5 billion, up 32% year on year.
Unsurprisingly, manufacturers are straining to keep up. However, the epidemic has brought to light constraints in the global chip supply chain, which is dominated by two corporations - Taiwan's TSMC and South Korea's Samsung. For mobile devices and military applications, these foundries lead the way.
Apart from the pandemic, other causes contributing to the scarcity include Taiwan's worst drought in 50 years. It has left TSMC and other factories unable to get adequate water for chip fabrication. According to Shane Rau, a semiconductor analyst at IDC, other catastrophes, such as factory fires, power outages, and the Suez Canal blockade, have slowed supply.
The crisis in Ukraine has also hampered the chip sector, notably the supply of neon gas required in the lithography printing process. Ukraine generates between 40% and 50% of the world's neon. Plus, the two largest firms that export the gas, Ingas, and Croyin, ceased operations when the conflict began. Many in the sector assert that stocks remain at a reasonable level. However, if the disagreement persists for many months, complications may occur.
