Written by Alan Earls.
To say there is a chip shortage is true but not very informative. There are still plenty of chips being manufactured in the world but not always enough and not always of the right type. Until Covid, the supply and demand for chips usually stayed pretty much in balance. In the past, the sudden popularity of a type of product or, say, an earthquake temporarily closing a chip plant, might throw things off-kilter, but not for long.
In those situations, it was typically a few kinds of in-demand processor chips – the brains of computers and other devices –that became bottlenecks. Memory chips to store and process programming instructions and data have also seen occasional rises and falls as devices grew steadily hungrier for data storage.
But this current period has been different. First, Covid put a lot of manufacturing on pause – shuttering both companies that use chips and companies that make chips. And with the world’s business slowed to a crawl, it was unclear where demand would come from. So, companies didn’t always push ahead with production plans. Then the Covid work-from-home (WFH) trend hit home. Adult workers and their kids suddenly needed more laptops and connectivity tech than ever before, which gobbled up a big segment of the chip market.
Add in travel and trade suspensions, the withering of once-robust international freight movements, and now compounded by a major shooting war in Europe, panic buying, sanctions… and you have even more disruption.
A March 22 Bloomberg Business article, The Global Fight Over Chips… provides tons of facts and figures to showcase how complicated and challenging the recovery picture really is. For example, according to Bloomberg, Europe and the US say they want to reclaim leadership and manufacturing capability in chips. China is investing $150 billion in its industry, vastly more than all the spending of all other governments in other countries combined.
But don’t expect American companies and the American government to just quit. There is talk of up to $52 billion in US government investment going into the semiconductor segment to make American consumers and companies less dependent on foreign suppliers for this critical technology. Long-time American chip leader, Intel is planning to invest $20 billion in two new production facilities in Ohio. And, Amazon, Google, Apple, and Microsoft have founded the Semiconductors in America Coalition (SIAC) in the U.S. for semiconductors to support this “reshoring” process. All of this attention and big investment in semiconductor electronics in the US is going to have ripple effects on opportunities.
Expect stronger ‘buy American’ policies from the government, especially the defense sector, but also other big manufacturers. American auto companies have lost millions of potential unit sales and billions of dollars because of chip shortages, made worse by difficulties far away and by long supply chains. You can bet from now on they will focus more on having reliable suppliers, backup suppliers, and suppliers in the USA, even if that costs a bit more.
All of this expansion will produce opportunities on the manufacturing side working for electronics companies and even supplying them with the tools and technology they need to do their job. It’s a potential bonanza, unlike anything to hit the industry in decades. Indeed, a survey by an industry group conducted late in 2021 stated that 67 percent of chip makers in North America are already having trouble finding qualified employees.
And Manpower Inc.’s Q2 US hiring survey, which looked at several submarkets that involving what they call “Digital roles” closely related to electronic technologies continue to drive the most hiring demand namely IT, Technology, Telecoms, Communications and Media. All eleven of the industry segments they track have strong positive hiring indicators for skills related to these technical areas.
So, what does this mean for boots-on-the-ground people in the US? A recent Wall Street Journal article explained that where manufacturers are struggling with a shortage of semiconductor chips they are “finding workarounds, redesigning products, shipping uncompleted units and focusing on older, lower-tech models.” Each of those options requires savvy people to execute – reconfiguring and adapting processes to accommodate modified designs, completing units, and testing them in the field instead of the factory, or providing TLC to older designs or products in service that may now need to get a new lease on life.
A recent Harvard Business Review article, “Engineer your way out of the chip shortage,” cited four routes to resilience. For one thing, companies are making software less dependent on specific chips, they are also making designs more flexible so that a choice of hardware products or modules can perform the same job. In that instance, they cite a statement by Acer, a major product manufacturer in Taiwan, that says it will now design new products from the ground up with more of a focus on being able to rely on more than one type of chip or other components.
All of this makes good survival sense for companies, but it is also going to ratchet up complexity and create new opportunities in manufacturing, test, and service operations as diagnosis and repair once again requires more judgment and skill.
Politically, a combination of consumer, and environmentally oriented legislation, collectively called “right to repair” is building support for more technician opportunities by making “throwing away” electronic products uncool and uneconomic.
The Arizona Public Interest Research Group (PIRG), a voice for reforming existing policies, in a recent blog advised readers to consider buying used or refurbished electronics to help the environment — rather than focusing on just the newest, latest, and greatest. For example, they state, “Repairing an old smartphone and putting it back into use… reduces the device’s global warming potential by 68% compared to buying a new one. That’s because manufacturing a smartphone emits as much carbon dioxide as 34 years of using it.”
PIRG also urges legislators to pass Right to Repair legislation. The problem, they say, is that manufacturers “continually undercut local fix-it shops and DIY enthusiasts by restricting their access to diagnostic software, repair guides, schematics, and other critical repair materials.” In addition, they say, manufacturers try to keep the repair business to only their own or authorized service organizations – an understandable goal but one that makes it more expensive to keep equipment in service by reducing competition.
While Right to Repair has faced stiff opposition from some manufacturing groups, Wikipedia points out the considerable momentum it is gaining, especially with the pandemic.
For example, US Senator Ron Wyden (D-OR) and Congresswoman Yvette Clarke (D-NY) filed the first Medical Right to Repair bill in August 2020 in an effort to help address the shortage of working ventilators during the early stages of the Covid crisis. Last year, Congressman Joseph Morelle (D-NY) filed his Fair Repair Act in Congress based on the Digital Fair Repair Act, which he had sponsored while serving in the New York State assembly. Massachusetts voters also passed a right-to-repair measure for automobiles (including electronic components) which is awaiting tweaks by the legislature.
Finally, last year, the Biden Administration issued an Executive Order to the Federal Trade Commission and the Department of Agriculture on July 6, 2021, to widely improve access to repair for both consumers and farmers. Subsequently, the FTC Chair Lina Khan held two public commission events where commissioners voted to advance Right to Repair as a policy objective.
Taken together, the disruption in chip supplies and the “build `em here” reaction in America, plus the forces pushing to do more hands-on repairs and updates, are based on a big assumption, namely that enough Americans will be ready to fill those jobs. Fortunately, prepping for jobs in the industry can start with basic knowledge of practices and electronic concepts that can then be built on throughout a career or added to with specific requirements at different companies. But it’s a good path to be on.