Firms struggle amid global shortage of computer chips

Dan Rozycki, president of a small engineering firm, worries about what a global semiconductor shortage could mean for curing concrete.

Rozycki’s company, Transtec Group in Austin, Texas, sells small sensors that are placed where concrete is poured at building, highway and bridge construction sites. The gadgets take temperature readings and wirelessly send data so workers with computers can ensure the material is hardening properly.

Like many other things in the modern world, from computers and cars to cash registers and kitchen appliances, the sensors require a couple of common, inexpensive semiconductors that have suddenly become a very scarce commodity.

“Every month, our product is getting more popular,” Rozycki said. “But we may not be able to make it in several months.”

Shortages of semiconductors, fueled by pandemic interruptions and production issues at multibilliondollar chip factories, have sent shock waves through the economy. Questions about chips are reverberating among both businesses and policymakers trying to navigate the world’s dependence on the small components.

Chip supply limitations are far from a new phenomenon. But past problems have typically concerned particular kinds of chips, like the types that help store computer memory or process vast amounts of data. This time, customers are also scrambling to find an array of simpler chips made in older factories. And those factories are difficult to upgrade.

President Joe Biden in February ordered a 100-day review of the semiconductor supply chain, a process that drew CEOs of 19 big companies to a virtual meeting Monday. Congress has backed legislation aimed at spurring more domestic chip manufacturing to reduce dependence on Taiwan and South Korea. Biden has proposed funding the initiative with $50 billion.

Most attention has focused on temporary closings of big U.S. car plants. But the problem is affecting many other sectors, particularly the server systems and PCs used to deliver and consume internet services that became crucial during the pandemic.

“Every aspect of human existence is going online, and every aspect of that is running on semiconductors,” said Pat Gelsinger, the new CEO of the chipmaker Intel, who attended the meeting with the president on Monday. “People are begging us for more.”

Personal computer giant HP said the shortage of semiconductors had prevented the company from being able to meet demand for computers ordered by schools. Rising chip prices also have made it harder to offer affordable hardware for less-wealthy school districts during the pandemic, HP said.

The supply problems are as multifaceted as the nearly $500 billion semiconductor business. Manufacturers turn silicon wafers to chips in complex processes using chemicals, gases and costly machines. Finished chips cross national boundaries dozens of times to partners that package, test and ship them to hardware makers and distributors.

Shortages this year have been exacerbated by episodes that include a fire at a Renesas Electronics chip factory in Japan, a drought in Taiwan and a cold snap in Texas that temporarily shut down factories operated by Samsung Electronics, NXP Semiconductors and Infineon.

For now, chip delivery schedules have stretched from around 12 weeks to more than a year in some cases, chip buyers and brokers said.

ILANA PANICH-LINSMAN/THE NEW YORK TIMES A Sensor Reader Module made by Transtec contains components which have become scarce for several reasons.