Austin is home to some major chip manufacturers, but none around the world can catch up with the demand for semiconductor chips.
AUSTIN, Texas — Experts call the semiconductor chip shortage the result of a perfect storm.
Some major chip manufacturers call Austin home, including Samsung, NXP and Applied Materials. A combination of the coronavirus pandemic, the Texas winter storms, a drought in Taiwan, a factory fire in Japan and tariffs from China have caused a shortage of chips most did not see coming.
"You couldn't you couldn't think of these ingredients in the last two or three years and probably timed it sequentially to hit where we are today as far as what the what the market shortage is," Mark Pollard, the chief operating officer of Astute Electronics, said.
Pollard helps connect companies who have excess semiconductor chips with those who need them. Right now, the supplies have dried up and everyone needs chips.
"Now you've got governments getting involved saying we're going to invest in foundries because it's a matter of national security," Pollard said. "We never want to be without our own raw material to make the components that go into warfighting systems, defense satellites and everything down to cellphones and 5G, which is also sucking up demand as well as that comes online."
According to Pollard, semiconductor chips are the fourth-most traded good across the world every day, behind only crude oil, refined oil and vehicles. Coincidentally, the shortage has also led to vehicle prices jumping.
Semiconductor chips are in nearly all modern technology from phones and laptops to the F-35 used by the U.S. military.
"We found after COVID-19 that we were very dependent and vulnerable to supply chains coming out of China when it came to medical supplies, to rare earth minerals, but most importantly, advanced semiconductor chips," Rep. Michael McCaul (R-Austin), said.
McCaul and Sen. John Cornyn (R-Texas) filed legislation called the CHIPS for America Act.
"Just like we became energy independent, we have to be chips independent, semiconductor independent," McCaul said. "It will be a $50 billion Department of Commerce grant program, which is highly significant, along with an investment tax credit, which will then incentivize these manufacturers to break the supply chains out of vulnerable areas in the world and bring them back to the United States."
McCaul added this money would be separate from the $50 billion already set aside by President Joe Biden's infrastructure plan.
"We have some resources in North America, not nearly enough," Pollard said. "A disproportionate amount of silicon comes from Taiwan and China. That's well documented. The EU is even more vulnerable. They have no foundries, so they have zero reliance on themselves for that."
Pollard said the $50 billion from President Biden's plan is a good start, but the demand for silicon will be constant and growing..
As the demand grows, so does the academic interest in the industry.
"The semiconductor industry is very large and diverse, so if people want to work in it, there's many jobs," Dr. Alberto Quinonez, department chair of engineering technology at Austin Community College, said.
Quinonez's department works with manufacturing companies for apprenticeship partnerships, connecting students with internships and jobs in the semiconductor and manufacturing industry.
"We started that in 2019. Currently we have about 12," Quinonez said.
Quinonez agrees with Pollard that the industry is in a unique bind.
"There's just been a perfect storm, if you will," Quinonez said. "The pandemic caused people to work from home, right, and to do online work and classes, which means that more people need things like tablets and webcams and laptops and a lot of technology, including the the technology to provide the Wi-Fi."
Pollard can't predict exactly when the shortage will end, but knows it won't be anytime soon.
"The impacts are going to be felt for at least two years," Pollard said. "Oftentimes the semiconductor supply chain is six to 12 months before you actually see that product in the consumer market and getting in the hands of the person that's actually using that device."