Wednesday, May 25

Mobile is tiptoeing through the serious chip supply crisis that suffocates the technology sector

One of the central points of the 2021 edition of the Barcelona Mobile World Congress (MWC) has been the potential of 5G. Operators and technology companies have exposed the capacity that the new generation of telecommunications will have to multiply the number of devices that can be connected to a single antenna, as well as the speed of those connections. For citizens, they trust, this will mean the definitive establishment of the Internet of Things after several years of yes but no. For companies, a dramatic boost to the possibilities of automation, robotization and sensorization of production processes. The autonomous car, halfway between the two, is one of the most publicized advances.

No chips for everyone: pandemic digitization threatens the production (and price) of cars, vacuum cleaners or refrigerators

Know more

The directors of multinationals such as the chip manufacturer Qualcomm or the equipment manufacturer ZTE, as well as IBM, Huawei, Amazon Web Services, Telefónica, Verizon, Orange or Deutsche Telekom have advanced at the MWC that 5G will skyrocket the number of digitalized and connected devices to network. However, what has not been discussed in the main world congress on mobile technology that ends this Thursday is the global crisis of shortage of microchips that suffocates the entire technology sector and that collides with the forecasts of expansion of 5G and the new wave of connected devices.

The consulting firm IC Insights advances that 5G, the Internet of Things and the greater need for technological equipment in the automotive sector may increase the demand for microchips by 19% this 2021. The calculation is “conservative”warn its analysts specialized in semiconductors, the base metals of the manufacture of integrated circuits.

“Taking into account the shortage of materials and oil, the current plans on 5G are impossible to carry out. At least in the times that have been foreseen,” warns Antonio Turiel, doctor in theoretical physics, CSIC researcher and author of Petrocalypse. Global energy crisis and how (not) we are going to solve it (Alphabet). “The shortage of microchips is a structural problem, very complex and with many layers,” he says.

Given the shortage of materials and oil, the current plans on 5G are impossible to carry out at least in the times that have been foreseen

Antonio Turiel
– CSIC researcher

The electronic components crisis has forced the launch of some mobiles to be delayed, the production of many consumer technology devices reduced or the lines of some car models stopped. Manufacturers such as Intel, IBM or Nvidia recognize that the situation is going on for a long time and they speak of 2022 as the year in which the sector can begin to “normalize”. The sector attributes the shortage to the problems to maintain the supply chains derived from the pandemic, added to the enormous demand for devices that it has generated. He considers it a temporary issue.

“This is not a bottleneck problem,” contradicts Julio Carmona, coordinator of the Digitization and Electromagnetic Pollution area at Ecologistas en Acción. “It is no longer just that there are factories or personnel or not, it is that there must be material that enters those factories. 5G and the Internet of Things represent a productivist leap in a time of crisis of resources on the planet, of change climate, “he says.

A very fragile chain

Although the chain of distribution and sale of microchips is made up of multiple companies, such as the aforementioned IBM, Intel, Nvidia, Qualcomm or Mediatek, in the production part this changes drastically. The Taiwan Semiconductor Manufacturing Company (TSMC) is responsible for manufacturing 60% of the world’s chips and approximately 90% of the latest generation microchips. According to the consulting firm Gartner, the next company on the list is UMS, based in Singapore, which barely reaches 8% of the market.

“It is a type of business that requires a manufacturing process of extreme complexity. It takes a lot of energy, a lot of water, the purity of the chips has to be very high in silicon oxide … all this implies facilities that do not they are available to anyone, “explains Turiel. “The machines to make the microchips are extremely expensive and can be worth around a billion dollars. This has concentrated the market in very few hands,” he says.

This situation “causes extreme fragility” in the supply chain in a critical sector such as the digital industry, warns the researcher: “In Taiwan right now there is a shortage of water, a derivative of climate change. They normally fill the reservoirs in times of Typhoons, but there haven’t been any this year, something that hasn’t happened in 58 years. ”

The pandemic has revealed the seams of a production line on which much of global digitization depends. Intel, which until now only produced microchips for its own products, has announced an investment of 20,000 million dollars to start up two plants to manufacture them and sell them to third parties. The problem is that these factories take at least four years to start up due to their complexity.

Materials and oil shortages

A large number of semiconductor materials are used in the manufacture of microchips. Some of them, such as the light rare earths (lanthanum, cerium, praseodymium, neodymium, promethium and samarium) have a “very high risk” of going into a supply break in the coming years, according to the report. Critical raw materials for strategic sectors and technologies in the EU of the European Commission.

Other raw materials used, such as Magnesium or Germanium, also carry a “high risk”. However, the problem is not only that these minerals are becoming increasingly scarce and demand cannot be met. Turiel warns that there are also “certain metals that are not in short supply on planet Earth, but what is happening is that their supply chains are being affected.” Especially because of the decline in diesel production.

“Extraction activities require a lot of oil, a lot of diesel. The production of conventional crude oil has been falling since 2005, we have been reducing for 16 years. This fall has been compensated with biofuels, with heavy oil from the Orinoco strip of Venezuela, the fracking… the problem is that many of these resources are not worth to make diesel “, explains the doctor in theoretical physics, who in April exposed this problem in an appearance in the Senate.

“Diesel production is stagnant and falling since 2015. But it is critical to mining operations. Many mines are in remote locations, without access to electricity, and the only way for them to work is with diesel-powered generators. The mines of many metals are very depleted, which means that you have to extract many tons of rock to extract a few kilos of material, which you also have to process later, “he explains. It is one of the reasons why some semiconductors have tripled in price in recent years.

The problems derived from the price of oil have also been noted in the production of plastics, another of the key elements in the microchip production chains.


The mining of rare earths and other semiconductor materials is a highly polluting activity. Not only because of its great energy needs, but also because of the mine’s impact on the ecosystem. “In the case of the Spanish State, we have several mining plans sponsored by these new needs,” says Julio Carmona, from Ecologistas en Acción.

The 5G network could increase the total energy consumption of the network between 150% and 170% in 2026

Ecologists in Action

The technology sector assures that 5G will contribute to the reduction of carbon emissions, since the deployment of sensors and the dataification that this will entail will help many industries to improve their energy efficiency. From the environmental organization they recall that, for the moment, the evidence is different: a Huawei report published in August 2020 recognized that the start-up of the 5G network in China had multiplied by 3.5 the energy consumption of the 4G infrastructure.

“The 5G network could increase the total energy consumption of the network between 150% and 170% in 2026,” they explain from Ecologists in Action. Problems like this have led the organization to join the request for a moratorium in the implementation of 5G, which have supported another 1,000 groups throughout the territory. “In the Spanish state it sounds strange, but it turns out that it is something that has been approved in a lot of municipalities in France or more than 600 in Italy,” says Carmona.