The Top Electronic Supply Chain News Stories Of 2022 

The electronic component and semiconductor supply chain volatility continued in 2022. From chip shortages, Covid lockdowns in China, the Russian invasion of Ukraine, inflation, natural disasters, and the mounting tensions between the U.S. and China there was no shortage of news impacting the industry this year. Here are some highlights:  

COVID-19

After over two years of living with Covid-19, the world is learning to adapt to the disease. But covid infections continued to bring lockdowns and supply chain disruptions, especially in China due to its “Zero-Covid” policy.  

This month, the Chinese government lifted its stringent due to protests and pressures from businesses. This abrupt policy change has already led to millions of new infection spikes which will potentially cause more manufacturing and supply chain disruptions in 2023.  

The Russian-Ukraine Conflict 

In February 2022, Russia invaded Ukraine. Since then, the ongoing conflict has impacted millions of lives, resulted in tens of thousands of deaths, and led to the largest refugee crisis Europe has seen since World War II. The war has also caused global supply chain disruptions and shortages in food, gas, and other critical commodities.  

For example, close to half of the world's semiconductor-grade neon which is used for etching silicon wafers comes from Ukraine which has been in short supply since the conflict began. On the other hand, Russia is one of the global largest suppliers of natural gas, and various rare earth metals such as cobalt which is key to making rechargeable batteries. Since the conflict began prices of such commodities have been increasing exponentially triggering global price hikes and inflation in various industries.  

Europe has been especially impacted by the conflict due to its dependency on Russian gas. Extreme heat and drought magnified these stresses, creating an energy crisis in Europe leaving several manufacturers vulnerable due to the energy crisis. We outlined these vulnerabilities in parts one and two of our Is Europe Prepared for Winter? report.  

China’s Advances on Taiwan 

China has been strengthening its military positioning near Taiwan for years, by building at least three islands in the disputed South China Sea (SCS) and fully militarizing them. Tensions between the two countries have been steadily increasing in recent months with China’s continued air drills in Taiwan’s airspace.  

In 2022 the industry has been watching and slowly decoupling itself from China as well as Taiwan looking to move manufacturing to other countries like Vietnam, Korea, Mexico, India, and the U.S.  

The US has expressed concerns about the latest development and is committed to continuing to assist Taiwan in maintaining its defense capability. Last year the U.S. Defense Department released a report on the U.S. strategy and response to China’s aggression in the South China Sea (SCS). The report stated that the U.S. will be obstructing China’s information dominance in the region with cyber and precision strikes on China’s key economic and informational capabilities.  

The U.S.–China Trade War 

Tensions between the US and China have been escalating in the past 5 years leading to the U.S. placing various sanctions on China. In 2022 the US government continued its regulatory actions aimed to curb China’s technology growth by expanding the China Export Ban on various Chinese Entities and passing the Uyghur Forced Labor Prevention Act (UFLPA) law preventing the import of any goods, and merchandise mined, produced, or manufactured entirely or in part in the Xinjiang Uyghur Autonomous Region of China. 

Additionally, the US has been investing billions in boosting the US domestic manufacturing capabilities to ensure technology dominance with the passage of the CHIPS and Science Act of 2022. 

Shortages, Excess Stockpiles, Price Hikes 

The year began with the industry continuing to struggle with chip shortages. Manufacturers reacted to the market and increased production capacity to meet demand but the focus was put on producing smaller node-size components that are used in consumer goods leaving the automotive and industrial sectors that use mature nodes at 40nm continuing to struggle with shortages.  

In the second half of the year, global inflation reduced consumer spending and demand for certain components such as DRAMs, computer processors, and other storage components leading to an excess of such components and OEMs canceling their future orders. Since then, manufacturers have started cutting production to avoid excess stockpiles but kept their prices high. 

We are closing the year with a mixed forecast and current market shortages vary based on technology nodes and utilization.  

Currently, the semiconductor market is polarized between the consumer-driven market and the enterprise-driven market. Although there is a slowdown in some of the consumer-driven markets the enterprise-driven markets, such as enterprise networking, enterprise computing, industrial, medical, and commercial transportation continues to grow.  

Rise in Fabs 

In 2022, the U.S., China, Europe, and various other countries declared semiconductors to be a vital component of their nation’s security and advancement. Billions of dollars have been spent and pledged by these governments to help advance their local chip manufacturing capabilities. The wafer fab equipment segment, which includes wafer processing, fab facilities, and equipment, increased to a new industry record in 2022 with the semiconductor manufacturing equipment revenue totaling $108.5 billion. This has fueled semiconductor powerhouses such as GlobalFoundries, Intel, Samsung, TSMC, and Texas Instruments to start building new semiconductor production facilities around the world with government subsidies. Z2Data has compiled a detailed New Global Fabs Report. Here are some highlights. For the full report please contact Z2data. 

Sustainability in the Semiconductor Industry 

In 2022 increased natural disasters, drought, and resource shortages brought the topic of Sustainability in technology back to the forefront. With global warming becoming a climate crisis, causing power, water, and other resource shortages it is becoming increasingly important for the industry to look into its environmental, sustainability practices (ESG). 

Last month the Semiconductor Climate Consortium (SCC), announced more than 60 founding members of the first global collaborative of the semiconductor ecosystem companies with the mission to reduce greenhouse gas emissions across the industry value chain.  

Additionally, governments have been looking at increasing regulations to help with the environmental impact as well as the human impact of the technology industry. The European Union (EU) has been working on more stringent environmental sustainability regulations. The new REACH and RoHS requirements revising  

The U.S. Securities and Exchange Commission (SEC) recently proposed new ESG and climate disclosure rules for public companies and passed the Uyghur Forced Labor Prevention Act (UFLPA) to prevent forced labor or slavery practices in supply chains.  

Natural Disasters 

Record atmospheric greenhouse gas concentrations have propelled the planet into unprecedented global temperatures causing increased weather events such as Hurricanes, floods, droughts, fires, and earthquakes in 2022.  

Extreme heat and droughts impacted Africa, China, Europe, and the US. While severe floods hit Brazil, China, India, and South Africa. Earthquakes devastated, Afghanistan, California, Indonesia, Mexico, and Taiwan.  

Finally, major storms such as Hurricane Ian, Hurricane Fiona, Typhoon Noru, Nanmdol, and Hinnamnor caused major damages in Florida, SC, NC, Cuba, Puerto Rico, Vietnam, Philippines, Japan, and South Korea respectively.   

Looking to 2023 

The state of the semiconductor supply chain has changed since the pandemic. Building strategies to navigate increased supply chain risks such as geopolitics, natural disasters, strikes, labor shortages, and other disruptions will help you to proactively mitigate any disruptions and successfully maneuver the ever-changing industry landscape.   

In 2023, we will continue to bring the latest industry news to help you stay ahead of disruptions, mitigate impending challenges, and build a resilient supply chain risk management program.