Skyrocketing demand, the pandemic and other factors driving current supply issues aren’t expected to go away in 2022, and shortages of certain materials and products will likely continue. But as companies get better at forecasting and responding to potential disruptions, their impact could be less pronounced.
The need for semiconductors has been growing for years, as the world becomes more digital and processing chips go into everything from smartphones to automobiles to washing machines. At least 169 industries have been impacted, with the automotive and consumer electronics industries among the most affected. Chips are complex and time-consuming to produce. Chipmakers across the globe are currently working at maximum capacity. The global chip crisis is due to a combination of different events with the Covid-19 pandemic being the primary reason for accelerating shortages, together with the China–United States trade war and the Russian invasion of Ukraine, as Ukraine produces about half of the global neon supply, needed for lasers in chip manufacture.
In India, a devastating heatwave has upset the nation’s wheat harvest, driving up prices around the world. Wheat prices were already hit hard by the war in Ukraine. Ukraine and Russia are some of the world’s biggest wheat producers, combining to produce around 25% of global supply. Shortages of fertilizer and pesticides have also left producers warning that this year’s crop yields could be smaller. Soaring natural gas prices in Europe and curbs on exports from Russia and China is expected to keep fertilizer demand high beyond 2023.
China curtailed production of aluminium and other energy-intensive metals last year as part of its plan to reduce carbon emissions. Surging natural gas prices in Europe have also pushed some producers to curtail production, exacerbating the global supply situation. Europe lost more than 650,000 tons of annual production capacity since the rise in energy prices began in October.