With most of the population locked inside their homes, the demand for consumer electronics skyrocketed while production dropped as factories were intermittently closed because of local outbreaks. Chip stockpiling in anticipation of supply difficulties by few companies made the situation worse. The crisis even got a new name, “chipageddon“. Even though the pandemic situation has eased, the chip crunch does not show any signs of abating. As per a Bank of America’s note to clients, supply constraints on semiconductor wafer and substrates would only partially ease in the second-half of 2021, while the tight supply of some leading-edge (computing, 5G chips) would extend into 2022 until the completion of inventory replenishment.
One of the unforeseeable consequences of the COVID-19 pandemic is the shortage of semiconductor chips across the world. According to a report from Susquehanna Financial Group, the global chip crunch has gotten worse since July, and the wait time—the gap between the companies placing orders for semiconductors and receiving them—has hit an all-time high at 21 weeks. It has impacted several sectors, especially the consumer electronics and automobiles industries. The situation is much worse for a few Chinese companies who face the dual challenge of logistics disruption caused by the pandemic and US sanctions. However, Semiconductor Manufacturing International Corp (SMIC), China’s would-be national semiconductor champion, is determined to fill in the void by scaling up.