Most people take the virtual shopping cart for granted and never stop to think about the complex supply chain that delivers a product into their hands. But that all changed at the onset of the COVID-19 pandemic when there wasn't a square to spare in the toilet paper aisle. Next, we saw everyday staples such as rice and flour disappear from the shelves. These problems weren’t just a result of panic buying, because as the pandemic deepened, the IC (Integrated Circuit) supply chain also started faltering.

Consumer electronics and automotive vendors had to adjust their product output, which in turn limited the supply of their products into the market. Large companies like those that produce industry-leading personal electronics and mobile phones have deep pockets, and they paid to reserve future fab ( front - end fabrication) time for their ICs. At the same time, more agile companies could afford to swap out ICs and rewrite software to circumvent their production delays. However, most companies that rely on a free flow of ICs are still suffering.

What can we learn from this, and what steps should companies take to prevent these issues from happening again?

It has been many years since our last pandemic, so it is understandable that most companies have never gone through one, nor had plans in place for dealing with one. In hindsight, quick access to real-time analysis of buying trends based on the public's reaction would have helped companies react faster to the changes. This takes understanding pandemic behavior, connecting that to associated technology trends and determining where companies would source their supply of the chips.

When the pandemic ramped up, remote work became the norm, so there was significant demand for technologies that supported working from home, such as monitors, cameras, phones and laptops. That demand drove increased chip consumption in those areas, so fabs focused on fulfilling those orders. In the meantime, automobile vendors predicted that the need for new cars would fall drastically due to fewer people commuting to work, travel restrictions and lockdowns. That was correct; during the depths of the first pandemic peak in the spring of 2020, sales of new vehicles fell as auto plants shuttered and many dealers closed showrooms. But retail sales to consumers rebounded far faster than anyone forecasted, since many people preferred driving instead of taking public transportation or flying.

Interestingly, since employees could work from almost anywhere, the demand for recreational vehicles also rose dramatically, overwhelming manufacturers with orders and causing further backlogs and exacerbating IC shortages. These factors drove and continue to drive that increased demand for the fabs.

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Is There a Solution to the Integrated Circuit Supply Chain Problem?