Hackaday Report: Will 2022 Bring A New Dawn For The Chip Shortage?

As the world begins to slowly pull itself out of the economic effects of the pandemic, there’s one story that has been on our minds for the past couple of years, and it’s probably on yours too. The chip shortage born during those first months of the pandemic has remained with us despite the best efforts of the industry. Last year, pundits were predicting a return to normality in 2022, but will unexpected threats to production such as the war in Ukraine keep us chasing supplies? It’s time to delve into the root of the issue and get to the bottom of it for a Hackaday report.

The Chips Are Down

Consumers were more interested in toilet paper than chip supply during the lockdown.

Going back to 2020, and as global economies abruptly slowed down in the face of stringent lockdowns it’s clear that both chipmakers and their customers hugely underestimated the effect that the pandemic would have on global demand for chips.

As production capacity was reduced or turned to other products in response to the changed conditions, it was soon obvious that the customers’ hunger for chips had not abated, resulting in a shortfall between supply and demand.

We’ve all experienced the chaos that ensued as the supply of popular varieties dried up almost overnight, and as fresh pandemic waves have broken around the world along with a crop of climate and geopolitical uncertainties it’s left many wondering whether the chip situation will ever be the same again.

Green Shoots In Idaho

Idaho leads the way in a chip shortage recovery! inkknife_2000, CC BY-SA 2.0

Amidst all that gloom, there are some encouraging green shoots to be seen. While it’s perhaps not quite time to celebrate, there’s a possibility for some cautious optimism. This month brought the hope that Potato Semiconductor might be cutting the sod on a new production capacity for their ultra-fast digital logic in Idaho, and with other manufacturers following suit it could be that we’ll once again have all the chip capacity we can eat.

But the other side of the chip business coin lies with the customer: we all see the chip shortage from our own semi-insider perspective, but have the tastes of the general public returned towards chips? Early signs are that as consumer confidence returns there are encouraging trends in chip consumption taking root, so we’d be inclined to advise our readers to have cautious optimism. If all goes well, you’ll be having your chips by summer.

The prospects for a new dawn in chip production capacity in 2022 look rosy, but there’s a further snag on the horizon courtesy of the Russian invasion of Ukraine. Like so many industries in a globalised economy, the chip industry depends heavily on supplies, consumables, and machinery from beyond the borders of wherever the plants themselves may lie.

In the case of Ukraine there’s a particular raw material whose supply has been severely interrupted, and though we hope for a speedy resolution of the conflict and a consequent resumption of production, the knock-on effect on the production of chips in the rest of the world can not be underestimated. Despite the ramp-up in output led by Idaho, the production of chips globally still relies heavily on Ukrainian sunflower oil. There’s a possibility that an acceptable substitute might be found in canola oil, but it will remain to be seen whether the chip-eating consumers will notice the taste difference.

If you would like to help the people of Ukraine in their hour of need, here are some organisations working on the ground to whom you can donate.

Header image: Daniel Kraft, CC BY-SA 3.0.