Patrick McAliskey: How we're being caught short with skills - and chips

A global shortage of semi-conductor chips is impacting production of cars, phones, gaming consoles, PCs and other electronics

WE’RE more than five months into 2021, and one of the big themes of the year so far has been shortages; and it hasn’t really been shortages of vaccines here in Northern Ireland as we continue to move through the vaccine programme at pace. Rather, it has been shortages of raw materials and skills.

The skills shortage issue has been one Northern Ireland has grappled with for some time in the tech sector, but skills shortages are also now really evident elsewhere as well, for instance in the construction and manufacturing sectors (highlighted in a range of surveys by organisations including Rics, Manufacturing NI and the NI Chamber).

We are also hearing of shortages of things like cars, phones, gaming consoles, PCs and other electronics. What these have in common is that they contain semi-conductor chips, and these are in very short supply.

Semi-conductors are the chips that manage functions like data storage, graphic rendering, and power consumption in electrical devices. They are typically made of silicon wafers and are everywhere in today’s digital world.

The reason for the shortage lies in the coronavirus pandemic. In the first lockdown, demand for laptops, monitors, smartphones, video-game consoles, and other devices shot up as people had to work and entertain themselves at home. Chinese tech companies have also been holding on to semi-conductors in the expectation that the US will bring sanctions restricting the country’s access to chip technology.

Apple has said that difficulties in getting hold of chips is impacting production of its iPads and Macs, potentially costing the company billions in sales. Samsung also announced in March that it may skip the launch of the new Galaxy Note smartphone, and Google is expected to limit distribution of its forthcoming Pixel 5a.

The car industry is one of the sectors that has been hit hardest by the shortage. Demand for cars dropped sharply at the beginning of the pandemic and many car-makers therefore decided to cancel their chip orders. Car sales though have had a stronger recovery than expected but by the time car companies tried to reorder chips, semi-conductor manufacturers were already struggling to meet demand from elsewhere.

BMW recently had to close two plants including its Mini facility in Oxford because of the shortage. Car-makers including Nissan, Toyota and Ford have also closed plants. Jaguar Land Rover has closed two of its UK plants for at least a week, while Volkswagen expects the second quarter of this year to be worse than the first.

Gartner predicts that the semi-conductor chip shortage will last into 2022, only recovering to normal levels in the second quarter of next year. Gartner expects the shortage to severely disrupt supply chains and constrain the production of many electronic equipment types during 2021.

Whilst the economic recovery is no doubt under way, these shortages, and other supply chain disruption will no doubt be a drag on its momentum. So too will the shortage of skills.

Indeed, whilst the semi-conductor shortage is (hopefully) only a mid-term challenge and is something over which we have little control, the skills shortage challenge - particularly in IT - is a long-term problem but one that we can influence.

Much good work has been done by many in industry, government and academia to help address the skills challenge. But we need to redouble our efforts, particularly today whenever digital transformation is happening at such a rapid pace.

:: Patrick McAliskey is strategic adviser at Cancom, a multi-national IT company headquartered in Munich, with 4,000 employees worldwide and 350 in Belfast.


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