Global semiconductor shortage to stimulate Saudi’s local production

By Amirtha P S, Trainee Reporter
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Semiconductor Chip
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The global shortage of semiconductor chips due to the COVID-19 pandemic has spurred the need for Saudi Arabia to increase its local production so the country can reduce its reliance on foreign manufacturers, a Kingdom-based IT expert stated.

According to industry experts, the deficiency which led the chip stocks to record highs will continue to be in short supply at least towards the end of 2021.

Maribel Lopez, the principal analyst at San Francisco-based Lopez Research, earlier stated that the chip industry is confronting “a perfect storm” of demand and supply issues that is unlikely to resolve soon.

“Unless we have a major economic meltdown, which is possible, one of the things that are happening right now is that almost anything you buy is going to have a chip in it,” Mr. Lopez added.

Meanwhile, some media reports suggest that in 2021, the chip prices can increase by up to 6 percent, but the delay has also seen a decline in production. Automobile manufacturer Ford said it could see production cut by 20 percent as a result of the shortage of supply. Last week, US President Joe Biden announced $37 billion in funding to address the crisis.

Dr. Muhammad Khurram Khan
Dr. Muhammad Khurram Khan
Founder & CEO
Global Foundation for Cyber Studies and Research

“The importance of semiconductors cannot be ignored due to their massive need in the Internet of Things, computers, smartphones, and consumer electronics devices. However, the global semiconductor scarcity and its unprecedented demand amid the pandemic have aggravated the situation for a wide array of industries. It has forced automotive, defense, industrial and other manufacturers to cut production and even shut down assembly lines.”

Experts suggest that if the current situation continues for the next few months, there are chances for a price hike to occur for electronic items in Saudi Arabia. So, it is better for local importers, businesses and consumers to plan accordingly.

Dr. Khurram Khan further stated that the current global supply deficit could be the catalyst for Saudi Arabia to invest more in this sector and develop its local capacities and this will help to lower its dependency on imports, meet the local manufacturing demands, boost the economy, and create job opportunities in the Kingdom following the Saudi Vision 2030.

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