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One small component is creating big delays in global supply chains: the ubiquitous semiconductor or chip. These components are not only essential to our phones, laptops and other electronics, but to the production process in just about every sector of the manufacturing industry. So, what would help us produce more of these desperately needed parts? According to Birlasoft Vice President and Global Business Head of Communications, Media & Technology Nitesh Mirchandani, the answer is cloud computing.

Why the shortage? As COVID-19 unfolded, millions of consumers purchased new laptops, smartphones, game consoles and other devices as they spent more time at home. This shortfall was compounded by the existing high demand for chips brought on by the growth in smart products—everything from thermostats and appliances to robot vacuum cleaners and GPS-enabled dog tags. COVID-19 also caused a wave of semiconductor factory closures that also exacerbated the problem. The result? A shortage that industry experts say could last through 2022.

Why the cloud? Cloud computing is the on-demand delivery of resources like data storage, software, networking and other services via the internet. Users either purchase a set subscription or pay by their level of usage—both cheaper and more flexible options than maintaining an on-site IT team for all needs. Cloud computing has several advantages for semiconductor manufacturers, according to Mirchandani:

• It speeds up time to market through swifter design and development. Because they can be accessed anywhere, cloud services enable teams to connect and collaborate more easily. Development cycles become quicker as teams connect better internally and with other parts of the business, including partners and suppliers.
• It enables data-driven business decisions. Thanks to the faster processing and analysis of cloud computing, manufacturers can get instant information on things like factory performance, supply disruptions or customer demand. Likewise, workers can be alerted to a machine that needs maintenance or to potential defects in materials or products.
• It provides service continuity. Internal IT teams often have limited resources. Cloud infrastructure is managed by specialists who can ensure uninterrupted service, so in-house IT teams don’t need to continuously maintain software through updates and patches.

Why it matters: Semiconductor shortages threaten to drag down the economy just as recovery is getting underway. Businesses rely on chip-enabled technologies for creating products, managing operations and maintaining the flow of goods and services. Consumers rely on them for smarter, safer homes and connections to work or school. Unless chip manufacturers can shore up production to meet demand, the ripple effect will create added distress for many sectors of the economy.