PHILADELPHIA (KYW Newsradio) — You've probably heard about a chip shortage recently. It's a big deal in electronics, and it's happening when we need more of them than ever.
Semiconductors, or chips, are small parts that help regulate electronic currents, including transistors, diodes and integrated circuits.
Dr. David Kurz, a professor at Drexel University's college of business, recently joined the KYW Newsradio In Depth podcast to break down the system. He said supply and demand issues, mixed with a digital boom, have led to the shortage.
"You had some shocks to that system — trade wars, COVID-19," he detailed. "There's some very specific climate issues that impacted some plants. There was a plant fire in Tokyo. Now you have a situation where supply just can't keep up with demand."
Only a few companies make semiconductors, according to Kurz.
"The top three — Taiwan Semiconductor, Samsung and Intel — make billions in revenue. But we're not talking about a lot of recent investment capacity so there aren't enough chip makers," he explained. "Even in 2000, we had companies that were making their own integrated circuits but then they realized it's much cheaper to outsource that so they don't do that anymore."
Because of that, he said these issues will likely stretch into 2022.
"Adding new production can take years and building a new plant takes up to three years," said Kurz. "That's a huge investment, so catching up demand and supply could be a years-long effort."
Kurz believes public policy support and leadership will be key in overcoming these issues. Some of the tasks he sees as key include, "reviewing critical supply chains, looking at ways to bolster American manufacturing, 100-day review of classes of products like semiconductors at the top of the list, high capacity batteries, pharmaceuticals, critical minerals and strategic materials."