The chips are down

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Editor's note: New year, old problem. The global chip shortage that began with COVID-19 forcing chip-making facilities in Asia shut in 2020 spilled over to 2021, and will likely continue in 2022. Maybe even further. According to research by Susquehanna Financial Group, the lead time—the gap between when a semiconductor is ordered and when it is delivered—is on the rise again, signalling persistent shortage. It stood at 25.8 weeks as of December, making it the longest wait time since 2017. The crunch was initially concentrated in the automotive industry, which saw a big dip in demand and cut its orders. The chipmakers focused on fulfilling the spurt in demand from makers of electronic devices, brought on by the lockdowns and work-from-home protocols. While car sales did bounce back quicker than expected in the second half of 2020, the demand for consumer electronics continued unabated. While looking at ramping up production, automakers found themselves at the back of the line for chips. The US sanctions on Chinese technology companies and extreme weather conditions that have disrupted the supply chain only aggravated the problem. …