With the ongoing chip shortage, the cost of raw materials has also risen. Chip manufacturers indicate that the increase in costs is a major issue contributing to the chip shortage. 90% of chip manufacturers report that rising raw material costs are continuously reducing their profit margins. They believe this trend will last for at least another six months, and we will have to wait for chips next year!
01Rising Raw Material Costs:
The rising costs of raw materials in the chip industry have exacerbated the chip shortage issue, which is expected to continue into 2022. Industry surveys indicate that the chip shortage affecting sectors such as automotive manufacturing may persist for a considerable time. Among the companies surveyed by IPC, more than half expect this chip shortage situation to last at least until the second half of 2022.
02Labor Shortages:
80% of chip manufacturers report difficulty in finding specially trained skilled workers, and labor costs are also on the rise. One-third of Asian chip manufacturers find it particularly challenging to locate qualified workers, while the corresponding figures for North America and Europe are 67% and 63%, respectively. 42% of Asian chip manufacturers state that their backlog of orders is continuously increasing, with North American and European manufacturers reporting similar figures of 60~65%. Manufacturers are retraining existing employees to fill vacant positions and are attracting more labor by increasing wages. Additional measures include offering employees more flexible working hours and more training opportunities.
According to a report by AlixPartners, the automotive industry is expected to lose $210 billion in revenue in 2021, with global vehicle production projected to decrease by 7.7 million units. This has also caught the attention of the U.S. government. This Thursday, U.S. Secretary of Commerce Gina Raimondo will meet with representatives from automotive manufacturers, technology companies, and chip manufacturers to discuss the chip shortage issue.
