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Survey Says: Semiconductor Shortage will Wind Down by 2024

Jan. 18, 2023
Most semiconductor executives expect their industry’s supply chain shortages to ease by 2024, but the challenges may not end there.

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A new report from Accenture should be music to the ears of procurement professionals who have been struggling under the strain of a global semiconductor shortage. A problem with roots that stretch as far back as the 2018-19 trade wars, the chip shortage accelerated during the pandemic and is only now showing signs of improvement.

Accenture says even semiconductor executives are adopting a more positive viewpoint, with 75% of them now expecting their sector’s supply chain challenges to ease by 2024. In The Pulse of the Semiconductor Industry, it also says that 65% of those executives believe Moore’s Law will slow down by 2025, “potentially causing the semiconductor industry to balance innovation with resilience.”

“As the demand for chips slows down amid inflationary concerns and an easing of the chip shortage, semiconductor businesses face a new set of challenges driven by geopolitics and a growing talent shortage,” said Accenture’s Syed Alam in a press release. “To succeed, companies need to balance being resilient in tough times with continued investments in innovation.”

What’s the 411? 

Accenture’s global survey of 300 senior semiconductor executives who evaluate their own companies’ supply chain outlooks also notes that: 

  • Semiconductors have been an integral part of hundreds of downstream industries and the backbone for the global technology infrastructure, which lets them sit prominently at the nexus of technology innovation, finance, geopolitics and human ingenuity.
  • Semiconductor companies today are fostering a greater sense of resilience in their operations to preserve innovation in response to the COVID-19 pandemic and recent deglobalization efforts.
  • ·Resilience and innovation are in competition while also complementing each other, challenging executives to address both without sacrificing the other.

Semiconductor companies are also acutely aware of the need to develop sustainable manufacturing practices while advancing sustainable technology through chip innovation. For example, Accenture says the overall semiconductor energy use in chip production has doubled every three years since 2010 and could consume nearly 20% of planetary energy produced by 2030, and a single large fab can use up to 10 million gallons of water a day, equivalent to the water consumption of roughly 300,000 U.S. households.

“Companies are reacting accordingly, with 41% of respondents indicating that almost a third of their CAPEX/OPEX budgets are dedicated to sustainable programs,” Accenture states in its report. 

Automotive Chip Trends

With each new vehicle containing anywhere from 1,000-3,500 chips, Accenture says that shortage of these components has disrupted the automotive and electronics industries, forcing some firms to scale back production.

Now, it says “traditional” vehicles are undergoing a renaissance and autonomous vehicles could be mainstream for mass transportation by 2024, according to 32% of the companies that Accenture surveyed. “As more electric vehicles come to market, manufacturers should balance transportation innovation rather than experience innovation,” it advises.

Concurrently, traditional modes of transportation are being upended by drone delivery and air taxis as airspace becomes the next frontier. “As more and more digital technologies are integrated into traditional mobility platforms, semiconductor companies need to level-up their innovations in this space,” Accenture adds.

Tackling New Challenges Head-on

Right now, inflation and economic concerns continue to be the top challenges for the semiconductor supply chain among executives that Accenture surveyed. Furthermore, executives believe issues like chip sovereignty and geopolitics will have the greatest impact on semiconductor innovation in the next 12 months.

“The pressures on the industry are real, and executives are focused on delivering industry stability,” the company points out. “In fact, 56% of executives believe the best way to enhance the industry's resilience is by promoting strong intellectual property (IP) protection and enforcement so companies can share technology while protecting their investment.”

Going forward, Accenture says the semiconductor industry will continue to face roadblocks, some of which it’s never dealt with in the past. The good news is that these mountains won’t be impossible to climb. “The executives in our research are bullish on their companies’ ability to develop the resiliency needed to tackle these obstacles head on, capitalize on the new opportunities and continue their unbroken streak of innovation,” it concludes.

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.