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Microchip Shortage

Microchip Usage

Microchip In a world where everything is getting smarter, many products we use contain software. Processors called microchips are used to run the software. For this reason, microchips are heavily needed in many industries around the world.

Almost every device, from a charger to a bottle pump, contains one or more chips. In fact, the microchips produced today are so advanced in terms of processing capacity that we can say that the microchip in a toy car is more powerful than the computers of twenty years ago.

The smartphones we carry in our pockets today have processors that are 100,000 times more powerful and memory that is one million times larger than the computers used in the Apollo spacecraft that carried people to the Moon. Of course, such high processing capacity in such small sizes means very complex and advanced chip production technologies. Until recently, this issue did not interest us much. Some technology companies were launching faster and cheaper processors every year.

However, in the last year, a microchip shortage has begun to emerge. Almost every day, we started to hear news of a factory that had to suspend production or reduce capacity due to chip shortage. In this article, we will try to answer questions such as how this worldwide microchip shortage emerged, why it cannot be overcome, whether it is so difficult to produce microchips, and how dependent the world is on microchips.

What is This Microchip?

We can briefly define a microchip as a brain that can process data and control the functions of electrical devices through the software on it. Microchip, also known as microprocessor, semiconductor integrated circuit, chip and chip; It is a group of electronic circuits placed on a metal plate designed with semiconductor materials usually produced from silicon. These integrated circuits contain billions of transistors and electronic circuit elements in an area the size of a fingernail tip.

The width of each conductor string in a circuit can be reduced as much as technology allows. While this measurement was 100 nanometers in 2008, it is 5 nanometers as of 2021. Intel’s first commercial microchip, the Intel 4004, produced in 1971, consisted of 2,300 chips, each 10 microns thick. Today, in chip technology, we use the unit of measurement, nanometer, which means one billionth of a meter, instead of micron, which means one millionth of a meter.

Chips produced today are 5 nanometers tall; In other words, it is 20,000 times smaller than a strand of hair. While there are hundreds of companies that design chips, the number of manufacturers that turn these designs into products is limited.

Chip Design

An electronic circuit; It is formed by placing circuit elements such as resistors, transistors, distances, inductors and diodes on a card and connecting them to each other with conductive wires. Microchips are designed as integrated circuits; In other words, the electronic circuit elements inside are not placed one by one on a panel, but instead consist of transistors produced on a flat panel using a semiconductor material such as silicon.

In this way, cheaper, smaller and faster processors are obtained. Designing and producing a microchip consisting of billions of components is a very costly task. Special tools and programming languages ​​are used for chip design. First of all, you need to design the chip you want to design using a “hardware description language” (HDL). Verilog is the most widely used HDL language for this. The hardware you create using this language is turned into a “netlist” through a process called synthesis.

Netlist can be defined as a kind of map that shows the interconnection of circuit elements. For this process, you can use open source tools such as “yosys” or more professional software. For the netlist you created, you need to complete the placement process called “place and route” by using special software. At this stage, the components are placed in the most appropriate way and their connections are established with each other.

The accuracy of the transactions is confirmed by detailed tests at all stages. Afterwards, the completed design is transferred to the factory for production. It is possible to use many different architectures in the design of computer processors (central processing unit: CPU). Each company can design its own unique processor. However, in order to use these processors, compatible software must be developed.

Some chip design standards exist because it would not be useful or feasible to repeatedly create software for each different chip type designed. These standards, called instruction set architecture (ISA), enable software developers to develop software without worrying about the design shapes of the chips.

The most commonly used instruction set architectures in chip design are x86, x64 and ARM. x86 is an architecture  developed and licensed by Intel and supports up to 32bit processors .

In addition, chips suitable for this architecture can only be produced by AMD and VIA companies with the permission of the company. The 64bit supported x64 architecture developed by AMD in 1999 quickly became widespread. Operating systems such as Windows and Linux used on desktop and laptop computers support both architectures.

ARM, developed by the British company ARM, is used by many more manufacturers with a more flexible licensing model. ARM architecture is preferred in portable devices thanks to its low energy consumption structure. The M1 processor series developed by Apple is also ARM-based.

Microchip Addiction

The United States (USA) and European and Far Eastern countries are trying to take urgent measures regarding the microchip shortage. China announced that microchip production is among the country’s top priorities. US President Joe Biden pushed the button to strengthen domestic chip production. The European Union is looking for ways to produce its own chips. Because almost all of the electronic devices we use now depend on these chips, and if chips are not produced, the national and international economy will come to a halt for many countries. Therefore, such a dependency pushes countries to take steps in this regard.


Although microchip shortage has been on our agenda in recent years, the beginning of the problem actually dates back to the trade wars before the pandemic. Additional taxation, import and export bans, especially between the USA and China, caused many technology companies to stock up. With the onset of the COVID-19 epidemic, life in the world began to change dramatically. The changes have caused many companies to reconsider their short and medium-term plans. People are stuck at home.

Production was suspended in huge production centers such as China. Cargo services have weakened due to reasons such as the closure of airlines and ports. Taking into account the economic stagnation that the process would create, companies reduced orders, especially in industrial products other than food. As a result, factories temporarily stopped production. However, with the pandemic, people’s demand for electronic products such as computers, game consoles, cameras and microphones, especially those they use at home, increased.

Those who were reluctant to use public transportation turned to cars. All this volatility had a serious shock effect on the supply chain. In addition to the pandemic, various natural events also affected production. The drought in Taiwan in recent months has affected microchip factories, which need large amounts of water for production. It took months for the Samsung microchip factory to return to full capacity after it was forced to halt production due to a snowstorm in Texas.

The problems caused by the fire at the Japanese Renesas chip factory have still not been resolved. Additionally; If you are interested in Chip design in areas such as crypto mining, artificial intelligence and cloud technologies, the following games may interest you:

  • Turing Complete A game where you learn to design circuits with various puzzles. NAND Game A game where you learn circuit design by completing tasks.
  • Logic World A game where you can design three-dimensional circuits and make simulations.
  • Silicon Zeroes A game where you design a processor starting with various circuit elements.
  • Shenzhen I/O A game where you both create circuits and write codes to run these circuits.
  • 29 depending on the developments; Excessive demand for high-performance computers is also cited as one of the reasons for this situation. Another reason is the rapid spread of 5G technologies, which use more chips than previous generations.

Why Aren’t More Produced?

Producing microchips is a very complex task, so much so that the number of countries that can produce microchips, which are considered one of the most complex products developed by humanity, can be counted on one finger. Opening and operating semiconductor factories requires billions of liras of investment, a long process and (perhaps most importantly) advanced knowledge. The cost of opening an entry-level factory that will produce 50,000 sheets per month is 15 billion dollars!

Moreover, it is not enough to open a factory and put it into operation in this field because technology is constantly evolving, it is necessary to allocate a serious R&D budget in order to be competitive in the market. In other words, the factory you opened falls behind technologically in about five years and needs new investments. On the other hand, it is not easy to find trained experts who follow current developments in terms of human resources.

It can take up to twenty years to train an expert in an interdisciplinary field such as physics, chemistry and electronics. According to a study conducted by Peking University, there is a shortage of hundreds of thousands of experts in this field even in China alone.

80% of chip manufacturers say they have difficulty finding trained human resources. There are not many manufacturers who manage to survive in such competitive and harsh conditions. Existing factories also operate twenty-four hours a day, seven days a week.

High competition, rapidly developing technology and the need for deep knowledge make it very difficult for new players to enter the industry. Today, the majority of smartphone processors produced in the world are produced by TSMC, 80% of computer processors are produced by Intel, and the majority of memory chips are produced by Samsung. However, when it comes to chip production, various political and environmental constraints also come into play. For example, the US prevents Dutch ASML from exporting lithography machines to China, making it difficult for China to establish new factories.

Another obstacle to its widespread use is that microchip factories consume excessive amounts of water. An average chip factory consumes 20,000 tons of water per day. This figure is equivalent to the daily water consumption of a city of 58,000 people. Therefore, a chip factory needs to be located in places that will not have problems with such resources or have expensive water purification systems .

All this means additional costs. Of course, where there is demand, there will be supply, and new players will enter the sector, especially with government support, but it will take years for them to reach a serious production capacity. Even TSMC, one of the world’s largest chip manufacturers, which has no problems in terms of knowledge and technology, will start production at the factory it will establish in Japan by the end of 2024 .

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