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Impact Of IC Shortage On Display Industry


Before the incredible invention of IC technology, the display manufacturing industry needed a more reliable and easy way to accomplish its tasks. So, to turn the proverb, that is, necessity is the mother of invention, into reality, IC tech was the practical solution to their problems. But, regardless of its significance, IC tech faced significant setbacks in the 1980s, 1990s, and early 21st century.

Although IC is a microchip that is very small visually but is the mastermind of every electronic device. James Yang, the president of INNOLUX, has cautioned of the shortage of LCD panels amid the hampering supply of IC chips. At the same time, its shortage has long-lasting impacts on the economy of the country as well as the LCD industry. Its consequences are enduring until conducive conditions get restored.

What Exactly Is An IC?

A computer chip also called an integrated chip, or IC, is a series of thousands of mini electronic circuits usually embedded in a conducting matter like silicon. These circuits are a thousand times smaller than discrete circuits and serve as building blocks in the LCD display industry. Due to their remarkable ability to operate at extreme temperatures, the modern world runs on them. It takes the role of a data storage device, an amplifier, a microprocessor, and much more.

Role Of IC Chips In The Display Industry

Manufacturing chips through technological advancements is a more complicated process. So the manufacturers of electronic and display devices rely on the production of IC chips. IC chips in TFT LCDs serve as the most integral component for consumer electronics and home appliances to multimedia, medical, and industrial automation. Power management ICs provide high proficiency to space-restrained applications such as wearables, sensors, and hearables.

Low Power Consumption– since they consume low power due to their smaller size, which makes them a significant component in the LCD industry.

Economical– due to their competitiveness, industrialists find it more reliable to replace them than to repair them.

Miniature In size– the fabrication process in the LCD industry involves the integration of active and passive components on the silicon chip. This makes IC chips much more reliable than discrete circuits.

Improved Functional Performance- The ICs are highly suitable for small signal operation due to better characteristics.

Causes Of IC Shortage

The failure to maintain the balance between demand and supply, needless to say, gives rise to colossal business damage. The IC shortage in 1988 and 1994 was due to the inability of ICs to meet high needs and shift towards new technologies, respectively.

In 2004 and 2011, there was a severe chips shortage, mainly due to CDMA, lack of facilities, and NAND reduction, respectively. As reported by the South China Morning Post, the IC shortage will last until 2022. Moreover, according to the latest figures by tech analyst IDC, an escalation of 11% was seen in the worldwide IC sales in 2020.

And IDC forecasts expect a build-up of 12.55% in sales by the end of 2021. In addition, for the last two years, the immense impact of the coronavirus has been evident and blatant. Without any discrimination, this virus affected all the nations across the globe.

Tech Cold War Stuck between USA and China

A trade war between a superpower and the rising global economy proved a disaster for the display industries, particularly TFT LCD panels. The hegemonic role of the USA is sometimes not wise and practical for other nations.

For instance, in 2020, to counter her rival country China, the US government put restrictions on SMIC (Semiconductor Manufacturing International Corporation), China’s biggest chip manufacturer. These sanctions do not allow other countries to keep any sort of trade relations with China.

That was a heavy setback for the Chinese economy. Nobody is untouchable in this tech world. In the past, the US government placed lots of sanctions to become self-reliant and get semiconductor supremacy. It is pretty worth saying; its effects are across the globe.

Major Cause; COVID 19

COVID 19 is the primary cause of IC shortage 2021. No doubt, COVID 19, an ongoing global pandemic, impacted almost every sphere of life. IC tech is not exempt from its negative impacts. Due to nationwide lockdown and suspension of significant business activities, imbalance in demand and supply chain massively impacted the global display industries and TFT suppliers.

The stay-at-home era during the pandemic particularly decelerated the growth of the display industry. Lack of interest in investing in new and advanced technologies is hampering the effective development of IC technology. Since the outbreak of the novel virus, it has also forced many companies to put a brake on manufacturing and selling.

5G Phones

The pandemic is not only the reason that triggered off the shortage of IC chips in display and TFT manufacturing. One of the leading causes of the lack of IC chips in the LCD display industry is the fast-track manufacturing of 5G phones. The 5G phones harness far more integrated chips than previous generations.

As the smartphones upgraded from 4G to 5G, the number of IC chips per phone lifted from 4-5 to 7-8. According to research, about a quarter of all the handsets traded in 2020 were 5G-ready. Resultantly, the display industry put a massive new strain on IC power production.

Double Bookings

The shortage of chips, brains behind every electronic device, was worst due to double booking. Double booking is responsible for a discrepancy in demand and supply chain, which ultimately causes scarcity of chips. The reduction in IC chip manufacturing automatically declines the availability of LCD panels for the display industry.

Escalated Demand For Cryptocurrencies

The amplified stipulation of cryptocurrencies such as Bitcoin is chewing up more and more IC chips every year, leading to global IC chips shortage. In order for Bitcoin to function, warehouses full of computers are used. The network becomes congested when the number of Bitcoin transactions accelerates.

So more processing power is needed to operate the blockchain efficiently and to solve complicated transactions. The professional BTC mining farms use giant server rooms filled with application-specific integrated circuit (ASIC) machines leading to an upthrusting shortage of IC chips.

Major Outbreak Of Global IC Shortage: Its Unprecedented Impacts

A tiny device at the heart of every electronic gadget has a ripple effect across the more comprehensive consumer electronics and LCD display manufacturing industry. The pandemic put enormous pressure on IC supply chains.

The display industry bounces back after factory shutdowns. Companies canceled the orders of chips formation, which sent the semiconductor supply into a downward spiral.

How are TFT LCD suppliers Suffering?

Due to supply disruptions, the top TFT suppliers AUO, INNOLUX, SHARP, SAMSUNG, LG, BOE, and TIANMA have warned of potential problems. The top managers have warned that due to undersupply of ICs, the companies would have to postpone the walkout of high-end products. Due to IC supply problems, SAMSUNG, one of the leading TFT LCD suppliers, put back the order for the second half of the year.

The companies also raised the prices of products to compensate for the sky-high prices of manufacturing material. The worlds’ biggest IC chip manufacturer, SAMSUNG, has warned of a severe imbalance in the supply and demand of IC chips in the LCD displays industry. Moreover, SAMSUNG also delayed releasing the new Galaxy Note smartphone until 2022 due to a global IC shortage.

Skyrocketing Prices

The LCD display products prices started shooting up with integrated circuit shortages. But by the sharp end of 2020, the prices pumped up to 50-70%. The expeditious development of domains like 5G and artificial intelligence has put on display a beamier application market for chips. So the fully loaded state of chip manufacturers and foundries has raised the prices of specific LCD panels.

Stockpiling

China stockpiled chips for the last two years to become a tech giant. This has given rise to the tremendous trade conflict between the US and China because China imports American computer parts.

This worsening trade relation has accompanied the LCD display panel manufacturers with a challenging situation, difficult to cope with. The shortage squeezed capacity due to shore up stocking and panic buying of chips by every company that requires them to maintain their production supply in order to lessen the loss.

It has increased the costs of even the cheapest components of nearly all microchips of final products. Consequently, the display industry is facing many downturns and contributing lesser to the economy.

Major Companies Turn Off.

The ongoing trade clash between China and the US has substantially impacted the nascent LCD display industry. As a result, there has put an enhanced risk to silicon curtains. Since China is not able to source high-tech IC components domestically.

This rapid IC component shortage is endangering many Chinese firms, including Fujian Jinhua and ZTE. This has also caused the blacklisting of Huawei Technologies Co., a Chinese company.

Deflated Product Development

With IC shortage 2021, TFT LCD display manufacturers have become more forethoughtful with using their current resources. Many industries are lobbying the government to sponsor the production of state-level goods.

Ultimately, the severe scarcity of IC chips has culminated in contracted product development. The digital integrated circuits shortage resulted in manufacturers offering fewer and fewer new products. In addition, some of them have started posting a lot of “out of stock” notices on the existing products.

IC Supply Shortage; What Is The Solution?

The production of digital integrated chips can’t be turned on and off with a switch. The ideal way out would be to neutralize the expense or settle upon a top-up revenue stream for your business. Analysts foretell that the global shortage of IC chips will continue to get worse.

Most semiconductor supplying industries have decided to expand their spending capital and budget to optimize the production of chips. To put it in a nutshell, tech firms should pay close heed to the fluctuating dynamics and trends of the market to retain their competitive edge.

Conclusion

The IC chip shortage on a global scale has set in motion significant real-world concerns. The LCD industry bears one of the heaviest burdens with extreme IC supply shortages. Moreover, it is no longer a mystery that IC chips crunch would inescapably affect more than one industry.

TFT LCD supply chains have been constrained due to restricted IC chips availability. It would be fair to quote that this trend would lead to the generation of supply chain issues. It is important to note that significant TFT LCD manufacturers idled their production and cut production due to the poor supply chain of ICs.

Resultantly, the current supply of digital integrated circuits will not be able to meet production if the demand continues to grow. There will be an even more dire need for chips as more manufacturers are unable to upheave production.




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