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Why is there a semiconductor shortage?

Tom Gill
Written By
Tamara Birch, senior writer, The Eco Experts
Reviewed By
Updated on 17 December 2024
  • A semiconductor shortage in EV materials means it’s slower to boost production
  • Semiconductors are a type of material with specific properties that makes them ideal for use as microchips in computers
  • Electric vehicles only work with semiconductors, as they can access the electrical charge held in the battery

Electric vehicles (EV) are expected to take over from petrol and diesel cars eventually, but there’s one issue: There’s a shortage in the materials we need to make them.

The ongoing semiconductor shortage is another factor affecting EV production all around the world.

We’ve investigated the semiconductor shortage, looking at why they’re essential for EVs, what’s causing the shortage, whether it’ll improve, and when the deficit will end.

Close up of a circuit board
A semiconductor shortage is slowing EV production

Semiconductors are a type of material with specific properties that makes them ideal for use as microchips in computers and other electrical devices, including electric vehicles.

They’re called semiconductors because they only conduct electricity under specific conditions — unlike ordinary conductors, which conduct electricity 100% of the time.

This gives semiconducting materials the unique ability to control electrical current, an essential quality for technology like electric vehicles.

Electric vehicles only work with semiconductors, as they can access the electrical charge held in the battery. They’re pivotal for performance improvements, too — EVs get better mileage the more efficient their semiconductors are.

Manufacturers typically make semiconductors from sand, as it contains large amounts of silicon, which is perfect for use in chips. Silicon is very efficient at conducting or insulating electricity, depending on what conditions it’s placed under.

The first setback for semiconductor production came as the COVID-19 pandemic disrupted industries across the world. Factory and port closures, labour shortages, and supply chain interruptions have all had massive impacts.

The fact that there’s a limited number of companies capable of using semiconductors to create microchips has caused issues as well. More than 80% of all microchip manufacturing is controlled by Samsung and the Taiwan Semiconductor Manufacturing Company.

It also doesn’t help that the demand for electric vehicles is going up at a much faster rate that they can be built.

EV manufacturers have already had to make changes to their products because of the semiconductor shortage.

Tesla removed one of the two control units found in the steering racks of their Model 3 and Model Y cars. Ford had to stop production of their electric Mach-E Mustang as they couldn’t source enough microchips in time. Toyota announced a production cutback of 100,000 vehicles in April 2022. There isn’t a company that hasn’t been affected.

A major problem is that electric vehicles use a lot more semiconductor chips than their petrol or diesel counterparts.

In a typical modern petrol car, you’ll find around 300–600 chips collecting driving data, powering screens, and managing emissions. Electric vehicles use upwards of 2,000 semiconductor chips, and some advanced models need well over 3,000.

Semiconductors form the backbone of all computing. Manufacturers use them to create microchips, which allow computers to recognise inputs. Each time you click on something or press a key, semiconductors use binary code to fulfil the function.

Microprocessors, graphics cards, and hard drives are all different types of semiconductors used in computers.

Below is a list of other technologies that use semiconductors:

Transportation

Almost every modern vehicle uses semiconductors in some way — from GPS, parking, and airbags to anti-lock braking and air conditioning systems.

EVs rely on semiconductors to be able to function at all. And the more complex an electric vehicle becomes, the more semiconductors it needs in order to make sure everything works.

Green energy

Renewable energy technology such as solar panels and wind turbines require semiconductors to operate properly. In solar panels for example, semiconductors are essential for converting sunlight into usable electricity.

Wind and hydropower rely on semiconductors to smooth the rate at which electricity is sent to the grid. They make sure the current generated from renewable sources is transferred with as little loss as possible.

Engineers also include semiconductors in sensors to keep solar panels and wind turbines working as efficiently as they can — without these sensors, they’d have no idea how well the panels or turbines were working.

If we want to see a fully renewable UK, semiconductors are an essential part of making that a reality.

Healthcare

Many of the most complicated surgeries require advanced machines that can operate with precision. These machines need plenty of semiconductors so that they can register minute details that could save someone’s life.

Pacemakers, heart monitors, x-ray machines, and ultrasound machines are all made possible thanks to semiconductors.

Household appliances

Imagine a home with no fridges, microwaves, washing machines, or televisions — that’s what a home without semiconductors would look like.

Chips are also used to change temperatures and times, activate features, and improve the efficiency of boilers. It’s almost impossible to think of the modern home without semiconductors, because so much of our lives has become connected to them.

The overwhelming majority of semiconductors are produced in Taiwan, Japan, South Korea, and China. These four countries control 87% of the global market, with the remaining 13% split between the US and Europe.

Taiwan alone is responsible for more than 50% of all semiconductor manufacturing, which has caused concern for many other countries.

Recent military rehearsals from China in the form of warship blockades along the Taiwan Strait have prompted fears of what might happen if this critical electronic supply chain were to be interrupted.

If China blockaded or invaded Taiwan, the resulting semiconductor shortage would damage the electric vehicle market for many years to come.

That’s why computing companies such as Intel have started investing in more semiconductor plants in Europe, to reduce the reliance on Asia. Pat Gelsinger, CEO of Intel, said in 2022 he wants half of the world’s semiconductor manufacturing to be in the US and Europe.

Silicon’s abundance means it will always be the preferred material for making semiconductors, but there are other elements we can use.

Germanium is one alternative. Like silicon, it’s capable of making complex shapes that give it semiconducting properties.

It’s not quite as effective though, because it doesn’t work at the high temperatures that silicon thrives at. Germanium crystals start to deteriorate above 50 watts, making it unsuitable as a semiconductor for countless appliances.

Germanium is also a lot rarer than silicon, which makes it far more expensive and harder to source.

  • A world without semiconductors is a world that doesn’t function
  • The ongoing shortage means the development of green technologies such as electric vehicles and more efficient grids has stalled
  • More countries around the world need to start producing semiconductors, rather than concentrating the bulk of production in a handful of places
  • Sand is everywhere – and so, therefore, is silicon – meaning the shortage hasn’t been caused by limited materials, but by a lack of ability to turn these materials into semiconductors
  • Semiconductors form the backbone of all computing. Manufacturers use them to create microchips, which allow computers to recognise inputs

Written by

Tom Gill

Tom joined The Eco Experts over a year ago and has since covered the carbon footprint of the Roman Empire, profiled the world’s largest solar farms, and investigated what a 100% renewable UK would look like.

He has a particular interest in the global energy market and how it works, including the ongoing semiconductor shortage, the future of hydrogen, and Cornwall’s growing lithium industry.

Tom also regularly attends Grand Designs Live as a Green Living Expert, where he provides expert solar panel advice to members of the public.

He frequently focuses on niche environmental topics such as the nurdle problem, clever ways to undo the effects of climate change, and whether sand batteries could store energy for clean heating in the winter.

If there’s an environmental niche to be covered, it’s a safe bet Tom’s already thinking of how to write about it.

You can get in touch with Tom via email.

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Reviewed By

Tamara Birch, senior writer, The Eco Experts

Tamara is a London-based journalist and has written about environmental topics for more than four years. This includes advising small business owners on cost-effective ways, like solar panels and energy-efficient products, to help them become more sustainable.

She has used her journalist and research skills to become highly knowledgeable on sustainable initiatives, issues, and solutions to help consumers do their bit for the environment - all while reducing monthly costs.

In addition to adopting sustainable practices in her personal life, Tamara has worked in the retail B2B space to help independent retailers think about their environmental choices and how they can help improve their business. She now uses this knowledge to help consumers do the same.

Her passion for sustainability and eco-friendly solutions stems from a long obsession with nature and animals and ensuring they feel looked after. In her free time, Tamara enjoys reading fantasy novels, visiting the gym, and going on long walks in new areas.

You can get in touch with Tamara via email at tamara.birch@mvfglobal.com.

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