Most of us are familiar by now with delays in receiving goods from overseas (anyone else become addicted to online shopping over lockdown?) which is in large part due to the backlog in major ports across the globe.

The looming crisis we expect to deepen in 2022 is the flow-on impact on supply chains that is seeing long delays in manufacturing and supply across almost every sector. More and more of our clients are also now experiencing the crunch of the soon to be infamous global semiconductor (aka microchip) shortage.

Initially spurred by the perfect storm of COVID-19 lockdowns of major factories in key manufacturing countries such as China, Taiwan and South Korea coupled with increased consumer demand for electronic goods as we all pivoted to working from home, the microchip shortage is projected to remain well into 2022, and has widespread implication for the manufacturing industry across the globe, including here in Australia.  

Now the shortage has come to a head with many key industries forecasting delays of 6 months or more for new cars, TVs, laptops and machinery- and this is applying pressure on inflation as sellers pass on the increased costs to consumers.

The US has pounced on this opportunity to become a leader in manufacturing microchips with the US government looking to provide industry incentives to US based companies such so they can start production. This provides new opportunities for manufacturers here in Australia to negotiate supply contracts with emerging suppliers.

The new microchip manufacturers moving into the semiconductor sector now want surety of demand to enable them to invest in setting up their manufacturing processes. Being prepared to enter into long term contracts or purchase bulk quantities can help you secure a favorable position with suppliers.