The first signs of the semiconductor chip shortage that currently impacts nearly every industry and manufacturing vertical imaginable began in 2018 when ongoing geopolitical trade disputes, component shortages, natural disasters, and other unexpected events severely disrupted global supply chains.
Semiconductor microchips have become ubiquitous in every type of electronic device imaginable. They are a necessary production component of electric cars, computers, aviation equipment, industrial machinery, and many more products in high demand by private customers, commercial businesses, and governments.
Though immense capital investments to bolster the production of semiconductor microchips are underway across many of the world's industrial nations, the tremendous cost to produce a state-of-the-art semiconductor chip foundry remains a massive barrier to entry. Microchips are made in state-of-the-art facilities using various advanced production processes resulting in a cost between $10-30 billion to produce a new production site.
The United States continues to be the global leader in the semiconductor design and R&D, responsible for generating $208 billion of the $466 billion earned across the worldwide industry in 2020. Competition to secure the supply chains and production capacity necessary to produce the world's most advanced semiconductor chips remains fierce.
Though the global automotive industry is one of the market segments most severely impacted by the global chip shortage, its effects promote negative outcomes across the business landscape due to the immense importance of advanced electronic devices for businesses, governments, and citizens around the world.
Read on to learn how the world's most advanced enterprise organizations are boosting supply chain resilience to develop more agile and effective business operations in the face of global uncertainty.
The Cost of Supply Chain Fragility and Poor Supplier Quality is Tremendous
In June of 2021, Interos released its Annual Global Supply Chain Report to outline the findings of a survey conducted with over 900 senior IT, IT security, and procurement decision specialists located at global enterprise organizations.
Among the most revelatory findings of this research is the insight that issues of supply chain fragility such as those posed by the global semiconductor chip shortage lead to $184 million in lost revenues for firms forced to endure them.
Interos found that:
- 88% of respondents queried in their supply chain survey concluded that capturing real-time visibility is more important today than it was two years ago
- 83% of respondents experienced negative reputation outcomes as a result of supply chain fragility and supplier quality issues
- 66% of respondents cannot analyze and interpret their supply chain dynamics in a holistic way
- 74% of respondents continue to rely on manual processes to complete analysis of supply chain relationships, challenges, opportunities, and outcomes
To put the scope of the semiconductor shortage in perspective, consider that Volkswagen, Toyota, Jaguar, Mercedes, Ford, Tesla, Nissan, BMW, and General Motors are just a few of the automotive companies that have been forced to limit production capacity or revise earnings projections as a direct result of the ongoing shortage.
Across the consumer electronic industry, another of the market segments most severely impacted by the shortage, LG, Apple, Sony, Samsung, Microsoft, and Nintendo are just a few of the major players forced to publicly outline these production setbacks in response to the ongoing crisis.
Of course, due to the pervasive nature of this ongoing challenge, its effects are continuing to ripple outwards across the global landscape. Even firms that do not require microchips for production feel the brunt of the crisis due to escalating costs and other tangential effects caused by the shortages.
Intel, Samsung, and TSMC, the world's most profitable semiconductor chip producers, have all publicly confirmed efforts to expand semiconductor chips; however for the time being, it's easier said than done.
For starters, the production of microchips is a highly specialized process that requires advanced human capital to execute the around-the-clock precision production needed to offset the tremendous cost of building new production sites. Furthermore, many firms are still struggling to contain sourcing problems due to the procurement of materials such as the 8-inch wafers and ABF Substrates needed to produce many of the world's most advanced chips.
Finally, when it comes to executing the production of the most advanced semiconductors, Dutch firm ASML remains as the only company in the world capable of producing the advanced photolithography systems needed to etch more than 100 layers of silicone onto the surface of each new microchip.
Harness the Incredible Potential of Precision Intelligence to Drive Supply Chain Resilience and Organizational Agility
It has been said that crisis breeds opportunity, and nothing could be more accurate across the international business landscape. The global COVID-19 pandemic has created a new normal state that has forced many businesses to dramatically reappraise their operations and attempt to pivot to more sustainable and profitable processes.
The world's most successful firms under today's market conditions are the ones that have developed an innate sense of organizational resilience and agility that allows them to anticipate uncertainty and make adjustments long before supply chain challenges become front-page news.
Risk management is the language of the C-suite. It should be the imperative of every corporate decision-maker across the business landscape to make the strategic investments necessary to ensure that the ongoing effects of the global semiconductor chip shortage are contained and resolved as soon as possible.
Supply chain resilience is not generated by accident. Instead, it is developed by utilizing real-world insights to harness a more robust and detailed understanding of the unique interconnected variables involved with the product life cycle from design through supply chain provisioning, production, and into the consumer's hands.
The world's most successful firms do not wonder or guess about current conditions or the whims of the future. Instead, they respond proactively based on the insights they have generated from structured and unstructured data sources. Bitvore's Cellenus datasets, for example, use advanced ML and NLP on unstructured data sources, allowing you to discover leading indicators of risk so that you can mitigate it and optimize your supply chain.
A New Day Has Dawned… is Your Organization Prepared?
The global semiconductor chip shortage is just the current crisis to envelop the international business community, but it won't be the last. The time has come to future proof your organization by realizing the immense potential of quantified unstructured data.
The answers your team is seeking are closer than you realize. Capturing the full potential of unstructured alternative data is the key to truly completing the digital transformation necessary to fully enter industry 4.0.
Bitvore is your risk discovery partner. Get in touch to learn how our datasets can help your teams remove risk in your supply chain.