Semiconductor shortage could affect bank card manufacturing

For several months now, we have been witnessing a worldwide shortage of semiconductors, the materials essential to the manufacture of so many electronic devices. Without these semiconductors, it is also impossible to manufacture bankcard chips, production of which is likely to slow considerably in the months ahead.

Why the shortage of semiconductors?

Semiconductor production is largely concentrated in Asia, notably South Korea and Taiwan. However, in the spring of 2020, the Covid-19 pandemic brought semiconductor manufacturing plants to a standstill for several weeks.

At the same time, demand has exploded: whether for telecommuting or leisure, sales of electronic devices such as computers, tablets, games consoles and smartphones have risen sharply.

The automotive industry was one of the first to be affected, as semiconductor producers initially preferred to sell their wares to smartphone manufacturers, as this was a more lucrative market. Several automotive giants, including Hyundai, Renault, General Motors, Ford and PSA, were forced to slow down or even temporarily halt their production lines.

Now it's the turn of bank card production to be threatened in the coming months by the shortage of semiconductors.

3 billion bankcards issued every year

Worldwide, 3 billion EMV bankcards - the standard used for Europay, MasterCard and Visa cards - are issued every year. So the stakes are high, and the need for semiconductors is considerable.

According to the Smart Payment Association (SPA), the organization representing the main bankcard manufacturers, the lack of semiconductors could lead to a shortage of cards as early as 2022, which would represent a real brake on consumption, given the worldwide use of this means of payment.

What's more, the pandemic has boosted the use of bankcards, particularly for contactless payment. In France, this means of payment is constantly on the increase, and has been adopted more massively than in other countries.

In fact, it was in France that the smart card was invented in the 1970s. There are currently 72.7 million bankcards in circulation in France.

A shortage of bankcards is likely to lead to increasing use of alternative payment solutions, such as digital wallets and instant transfers.

The European authorities, aware of the risks involved in relocating production, have set themselves a deadline of 10 years to double the volume of semiconductor manufacturing in Europe.