The chairman of Swedish-Swiss engineering giant ABB is expecting the global semiconductor shortage to ease soon, but believes diversifying the chip supply chain is “very important” as China–Taiwan tensions remain a “risk.”
“But if I look today at it, I think it’s now being sorted out. I think global growth slowdown has helped on this as well, and now for the future, I’m quite optimistic.”
COVID-19 in China and disruptions in international trade hit ABB business hard last year. In China, the company was forced to shut down factories during lockdowns. Voser expects a “more normal environment” in China this year.
However, he sees the simmering tensions between Beijing and Taipei as an ongoing risk. Taiwan is home to the Taiwan Semiconductor Manufacturing Co. (TSMC), the largest microchip manufacturer in the world. As such, any threat of disruption to the supply of chips from Taiwan is bad news for the various global businesses that depend on TSMC.
Easing Chip Supply Situation
In a Jan. 3rd survey (pdf) by professional services firm Accenture, which polled 300 global semiconductor executives, 77 percent of respondents were expecting the supply chain to be free from COVID-19’s “lingering effects” only in 2024.Electronics and automotive industries have been forced to scale down production following “persistent chip shortage.” New vehicles can contain up to 1,000–3,500 chips. The report notes that there are “signs” that the chip shortage is easing.
“October 2022’s reported lead times were 25.5 weeks, compared with 26.3 weeks in September. The highest lead times of 27.1 weeks was in May, compared with the 24.4 week delay in the previous October,” the survey report said.
“Manufacturing expansions are planned in Europe and elsewhere, and brand-new foundries are being built by several companies in the United States, notably in Arizona, Texas, and Ohio,” the report states.
US Chip Manufacturing
The United States has taken the initiative to boost its presence in the chip manufacturing sector. Last year, for example, the Department of Commerce stated that a long-term solution was needed to make sure that the issue of semiconductor supply does not pose an economic and national security risk to the country.In August 2022, the CHIPS Act was passed. Introduced in spring 2020 during the time of the Trump administration, the CHIPS Act is aimed at attracting investment in semiconductor innovation and production.
Between May 2020 and December 2022, more than $186 billion worth of semiconductor manufacturing investments spanning a 10-year period have been announced. Collectively, these projects are expected to generate more than 34,000 jobs.