Industries around the world are facing production challenges due to an unprecedented global microchip shortage. Goldman Sachs determined 169 industries have been critically impacted by the shortage – from automotive, home appliances, breweries, and even soap manufacturing. Businesses requiring microchips and related components for production now face substantial cost and lead-time increases, including Touch International (TI) and Touch International customers.
The Covid-19 pandemic triggered the global chip shortage. The world watched as China was first to lockdown under stay-at-home orders in efforts to ease the spread of the virus. As the pandemic spread globally, so followed the stay-at-home orders. Semiconductor foundries shut down, and production halted around the world. The lockdown also forced tighter restrictions at ports and international borders, slowing the supply movement and exacerbating the chip shortage. At the same time, the public faced a new lifestyle of remote working, schooling, and socializing. The need for home offices, at-home-classrooms, and new forms of entertainment, spurred an increase and sudden demand for electronic devices that rely on semiconductors. These and other factors have caused intense stress on the supply chain.
The pandemic has made it evident that diversifying resource production and allocation is vital to keep a healthy supply chain. Globally, industry leaders and governments are working to ease the strain on manufacturing and looking toward production and resource independence. June 2021, the United States Senate passed the United States Innovation and Competition Act (USICA) which includes $52 billion in federal investments for CHIPS for America, recognizing the crucial role the U.S. semiconductor industry plays in its future. Bloomberg reports that the European Union set a goal in 2020 to produce 20% of the world’s semiconductors, involving redeveloping existing foundries or building new ones to lessen reliance on Asia and the U.S. for technology resources.
Touch International’s ongoing communications with manufacturing partners and suppliers also reflect no sign of immediate relief. In some cases, lead times for microcontrollers have been extended as far as 52-weeks, with price increases 3-5x compared to previous quotes.
The end of the shortage is as unpredictable as its beginning. As the world has gradually re-opened, chip manufacturing capabilities have started to increase. Semiconductor supply is expected to rebound by the end of 2021; however, the road to supply chain recovery is long. Speaking to CNBC, AMD CEO Lisa Su states that chipmakers are still playing catch-up to meet demand, but the “shortage will be less severe by in the second half of 2022” as more foundries are built or re-opened. Experts predict the global chip shortage will remain until 2023.
Touch International’s ongoing communications with manufacturing partners and suppliers also reflect no sign of immediate relief. In some cases, lead times for microcontrollers have been extended as far as 52-weeks, with price increases 3-5x compared to previous quotes. TI continues to monitor the situation while exploring supplier options, expanding supply chain visibility, tracking lead indicators, and diversifying TI’s supplier base by qualifying alternative microcontrollers for new and existing customer designs.
In the interest of mitigating this situation, TI is requesting that all customers communicate a 24-month order forecast so our team can continue working on strategic supply chain management. TI urges customers to place orders for controller demand to secure inventory and minimize impact.
For further questions regarding the impact on TI products, custom orders, or forecast, please contact your TI Sales representative or TI Corporate Office at http://touchinternational.com/company-overview/contact/.
About Touch International
Touch International (TI) is a global manufacturer of professional-grade custom touch screen and display solutions. Since 2002, TI has become a world leader in high-reliability markets, including military, medical, aerospace, heavy-duty transport, retail and public use, and other industrial markets. The company operates its corporate headquarters and design center in Austin, Texas, and has three high-capacity manufacturing centers in Shenzhen and Zhongshan, China, and Bangalore, India. For more information on the company and its capabilities, visit https://www.touchinternational.com.