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The semiconductor shortage is set to slowdown the U.S. economy

The signals indicate that the U.S. economy will roar back. Yet the continuing shortage of computer chips could well dampen the anticipated boom.

Integrated circuit from an EPROM memory microchip showing the memory blocks
Integrated circuit from an EPROM memory microchip showing the memory blocks

The U.S. Institute for Supply Management has announced that their index indicates continued manufacturing expansion. While this signals an upturn for the U.S. economy, it leaves the semiconductor sector scrambling to assess, fix and recover from the pent-up pandemic demand.

Such is the extent of the problem that Intel’s CEO has reiterated his warning that the global chip shortage could well last for years.

One of the causes of the shortages is indirectly connected to the coronavirus pandemic. As major cloud infrastructure providers saw demand skyrocket, due to millions of people n working from home and children were attending school remotely, this also led to a rush with the purchase of personal computers, tablets and consumer electronics, he said.

Looking into the issue for Digital Journal is Supplyframe CMO, Richard Barnett, a veteran semiconductor supply chain expert.

Barnett explains that the global semiconductor shortage continues to wreak havoc, and the impact could easily slowdown the otherwise expected economic gains. This means the industry needs to focus in order to lower their risk of component shortages and build resilience into their products.

Barnett  continues, noting that the situation remains a long-term one: “Leading semiconductor producers are doing everything in their power to overcome the chip shortage, but the hard reality is that we can’t expect any quick fixes.”

Looking at the recent economic indicator specifically, the analyst finds: “The Institute for Supply Management announced that its index of manufacturing activity rose from 60.7 in April to 61.2 in May, making it the 12th consecutive month of growth. Any reading over 50 indicates that manufacturing is expanding.”

Thus, good so far, however Barnet points out: “Yet semiconductors are still struggling to catch up with demand. Every industry from cars to lumber and tech has been affected by the chip shortage, which highlights how vital semiconductors and other electronic components have become to the world around us.”

This means companies need to adapt their strategies, as Barnett notes: “It also illustrates the need for businesses to employ solutions that provide forward-looking, multi-tiered insights on dynamics impacting material trends related to semiconductor and electronic component engineering and sourcing strategies to increase their opportunities and resilience.”

Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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