The 2020–2023 global chip shortage is an ongoing, worldwide chip shortage affecting more than 169 industries. The crisis has led to major price increases, long queues and reselling among consumers and manufacturers for automobiles, graphics cards, video game consoles, computers, household appliances, and other consumer electronics that require integrated circuits (commonly called "chips").
From early 2020, the effects of and the mitigation of the COVID-19 pandemic caused disruptions in supply chains and logistics which, coupled with a 13% increase in global demand for PCs owing to some countries' shift to a stay-at-home economy, impacted the availability of key chips necessary for the manufacturing of a broad swathe of electronics. The pandemic's impact on the manufacture of semiconductors in South Korea and Taiwan was cited as a cause for the shortage, with constrained supply impacting industries as broad as console gaming and the automotive industry.
In February 2021, market analysts IHS Markit were cited by the BBC as forecasting the impact of the dearth to last through to the third quarter of 2021; lead times on chip supply at this time had already extended to 15 weeks, the longest lead time since 2017. By April 2021, lead times for semiconductors from Broadcom Inc. had "extended to 22.2 weeks, up from 12.2 weeks in February 2020".
Severe weather events including the droughts in Taiwan during the summer of 2021 were also a significant contributing factor. The droughts affected the production due to the lack of available ultrapure water that is needed to clean the factories and wafers.
At the end of Quarter 1 of 2021, used car prices in some countries were increasing due to the demand from both economic recovery, as well as the chip shortage. The price of some cars increased as much as 10% in Q1.
Causes
The global chip crisis is due to a combination of different events described as a perfect storm with the snowball effect of the COVID-19 pandemic being the primary reason for accelerating shortages. Another contributing factor is that demand is so great that existing production capacity is unable to keep up. Other causes have been attributed to the China–United States trade war and the 2021 drought in Taiwan.
COVID-19 pandemic
An increase in remote work and remote learning caused a surge in demand for computers, network peripherals, and other consumer electronics with chips. Due to lockdowns, chip production facilities were shut down, leading to the depletion of inventories. In the fourth quarter of 2020, traditional computer sales saw a 26.1% growth over the previous year.
China–United States trade war
In September 2020, as part of the economic conflict between China and the United States, the US Department of Commerce imposed restrictions on China's largest chip manufacturer, Semiconductor Manufacturing International Corporation (SMIC), which made it harder for them to sell to companies with American ties. These restrictions forced companies to use other manufacturing plants like Taiwan Semiconductor Manufacturing Company Limited (TSMC) and Samsung. However, these companies were already producing at maximum capacity.
In 2020, GlobalFoundries, a U.S.-based chipmaker and AMD's semiconductor manufacturing arm before its IPO, ceased operations at its only Chinese plant. The fab was supposed to produce 300 mm wafers, but the 65,000-square-meter factory in Beijing never began production.
In October 2022, the United States announced they would introduce further measures in restricting sales of computer chip technology to Chinese companies, primarily affecting sales of advanced chips necessary for cutting-edge technologies. As a result, the shares of major Asian chipmaker companies have slumped during the reopening of stock markets in Taiwan, Japan, and South Korea after public holidays.
In October 2022, Washington mandated that companies using US software or hardware must obtain licenses before exporting chips to China. This is regardless of their country of origin. The US also urged Japan and the Netherlands to implement similar regulations.
Cryptocurrency
The increased use of proof-of-work cryptocurrencies led to a large amount of mining, done primarily with general-purpose graphics processing units (GPGPUs). The high demand for GPUs for cryptocurrency mining reduced their availability for other uses.
Severe weather
A severe winter storm in February 2021 forced the closure of three plants in Austin, Texas owned by Samsung, Infineon, and NXP Semiconductors, due to loss of electricity. This set back supply from these plants by several months.