The Covid pandemic revealed to the public that the global supply chain is in bad shape – something that those working in the inner circles of the industry have known for some time. Experts have predicted that a set-back like the pandemic could disrupt the industry for years – a scenario that we are now living as they warn that the supply chain shortage will continue into 2023.
“It is going to be way into 2022 and honestly, my belief is managing the supply chain will be something which will be with us for [a long time],” Siemens Energy CEO Christian Bruch, who told CNBC Wednesday.
While it’s easy to blame the pandemic for the lack of groceries at your local supermarket, high car prices, and the inability to secure a PlayStation 5 gaming system – there are still other factors that contributed to the disruption. Natural disasters like the power shortage in China did not help; the United Kingdom breaking away from the European Union also created labor shortages in the country. All of these issues combined is wreaking havoc around the world.
In fact, some experts believe the chip shortage originated in February 2020 and was exasperated by the pandemic and not caused by the outbreak. According to Koray Köse, an analyst at Gartner told BBC that the rise of 5G contributed to the shortage of chips as well as the United States’ decision not sell semiconductor chips made by Huawei Technologies. Köse stated that the pandemic was “probably just the last drop in the bucket."
So when can we expect the chip production to go back to normal? It’s hard for say – even experts that have studied the supply chain industry for years don’t have a clear answer Seda Memik, professor of electrical and computer engineering, and computer science, at Northwestern University stated "It will take multiple years to accomplish… a better balance." She also pointed out that the pace of demand for chips has been consistently rising these past few years. Pandemic or not – the chip shortage was "inevitable".
The supply chain has always been fragile – having numerous components to it. There are the people who manufacture the product such as factory workers; those who deliver the product such as truck drivers; and business owners who sell the products. If factories get shut down due to covid – items can’t be made. If truck drivers go on strike – the items are made but not delivered. Finally – if businesses are closed due to labor shortages – the item is made and delivered but not sold.
As the industry experts try to find a cure to the supply chain shortage – it’s safe to say that the shortage will be going on for most of 2022 – if not into 2023.
