What is the Global Chip Shortage?

August 18, 2022

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The supply chain bottlenecks we’re experiencing worldwide start with chips, specifically, chip shortages. Only a few previous unbalanced markets can compare to the current global chip shortage. However, it is exceptional in the breadth of product groups experiencing a supply and demand mismatch. And there are no signs of the phenomena slowing down any time soon.

Chip vendors have raised prices by 5% to 15% across the board in response to supply restrictions and rising raw material shortages and expenses. Price increases for older analog and diode technologies have reached 20% to 25%. According to Jabil, these rises, like the shortages, are likely to persist beyond 2023.

Certainly, it isn’t the first time this has happened; severe chip shortages have occurred before, including in 1988 owing to excessive demand and in 2000 due to a scarcity of many Intel products. Then there was the 2011 earthquake in Japan, which produced a significant shortage of NAND memory and screens. Today, the global chip shortage is due to an increasing lack of skilled personnel, particularly highly qualified engineers needed to develop new chips and handle production challenges for ever more complicated ones. 

Many sources quoted by the WSJ said that the supply-demand disparity is widening because of the talent shortage:

“The world’s leading chipmakers are competing for personnel to staff the billion-dollar-plus facilities they are constructing worldwide to address a semiconductor shortage. […] New chip-making facilities, known as fabrication factories, need the employment of thousands of college-educated engineers. Technicians supervise and manage the production process, while researchers contribute to developing new types of chips and manufacturing methods.”

Furthermore, according to a research by Eightfold.ai, about 70,000 to 90,000 people or more would need to be hired in the United States alone by 2025 from 2020 levels to cover the most important manpower demands for predicted fab development. So, how can companies cope with this talent shortage they are facing?

One solution is nearshoring. Nearshoring is a tried-and-true method of staying competitive by recruiting talented individuals in the same time zone but living in lower-cost-of-living locales. 

Here is everything you need to know about the tech talent shortage and what you can do about it: Are you struggling to find software engineers?

ITJ supports fast-growing and high-value market areas by assembling talented teams, saving organizations valuable time and resources in recruitment, and establishing big, low-cost, high-performance software engineering centers. Get in touch with us, and we can help you solve your talent shortage obstacles.

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