Semiconductors help power everything from your phone to your car. Here's what to know about the major supply chain problem.
in 1965; it held that “the number of transistors incorporated in a chip will approximately double every 24 months.” And building a factory that can create these chips, which have been consistently shrinking over the years, can cost $10 billion, a price that is prohibitive to most companies. “These are multibillion dollar facilities at the cutting edge of science,” says Lewis.
Car companies, like Ford, have to predict the amount of chips they will need to produce their cars and order them in advance from one of the chip manufacturers. As of now, it can take at least half of a year for a chip order to come in, says Penfield. The current demand for chips is so great that manufacturers can’t make enough chips to meet it at this time, meaning consumers will soon be seeing higher prices for less goods.But the issue wasn’t just with manufacturing.
Bad decisions by the auto industry also added to the shortage. When COVID started, many companies canceled their orders for chips because they assumed the economy was about to take a lengthy hit, says Lewis. Car companies in particular cancelled orders, so chip companies switched to making chips for consumer products, attempting to meet the explosive demand caused by the pandemic. Having retooled their plants to make chips for consumer goods instead of cars, a shortage of car chips ensued.
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