Chip shortage: how long will it last?

The drop in component production started in 2020 due to the Coronavirus pandemic and we still wonder how long the chip shortage will last.

During this period, it was common to find several electronic products missing in the market, right at a time when there was an increase in demand for new smartphones and laptops. In fact, chip shortage is the reason why the PS5 is so hard to find!

After all, what are these chips?

Also called semiconductors and microchips, chips act as the brains of our electronics. They house billions of transistors inside them, although chip size can vary. Further, these transistors are like little gates, allowing electrons to pass through them or not.

Its construction is very complex and involves several stages, a long time, and specialized professionals. For example, IBM’s newest chip packs 50 billion transistors into a two-nanometer space, and it is as small as a fingernail.

“I imagine there are more than 100 billion chips in daily use around the world,” says Matteo Rinaldi, professor of electrical and computer engineering at Northeastern University.

You can imagine how many transistors and semiconductors we use every day in our lives!

These chips are the lifeblood of modern society, but even before the pandemic, demand for them exceeded supply. Also called “the new oil”, semiconductors are mostly controlled by Taiwan and Korea.

Although it is an American invention, currently, the number of American manufacturers has drastically decreased. In 1990, 37% of chips were made in the United States and by 2020, that number was only 12%.

The pandemic and chip shortage

The pandemic played an important role in creating the imbalance between supply and demand, resulting in what we are seeing today with the chip shortage.

In addition to rising PC and smartphone sales, there were still some geopolitical tensions between China and the US midway that led Chinese tech companies to aggressively stockpile chips and equipment.

In addition, computer manufacturers, for example, have been suffering from severe supply chain problems for over a year.

Although the PC industry posted record sales in 2020, analysts believe the numbers could have been even higher if the components had been readily available.

Buying consoles these days is not an easy task either. Many people started playing more video games during the pandemic and, as a result, it is very difficult for companies to meet the demand.

Last year’s industry-wide trend has shown difficulty in both manufacturing and acquiring video game consoles, so unless the chip shortage is corrected, the production side will remain limited.

A widespread problem of chip shortage

We can list some examples of the problem caused by the chip shortage.

First, we had the launch of Apple’s iPhone 12 Pro. In this case, some consumers had to wait up to three weeks to buy.

The other tech giant, Xiaomi, also suffers from a lack of these components.

The bleakest prediction is that there could be shortages of several products during the peak consumer electronics sales season.

Added to this, the consumer will feel the increase in prices, given that manufacturers are passing on to them the costs of the lack of chips.

The fact is that companies that tend to buy products on a larger scale may be even more affected.

Everyday life impacted by the chip shortage

Chips are found in many everyday products that, unlike some consumer electronics, did not necessarily experience a boom in demand during the pandemic.

However, they are bound to be affected by global scarcity.

The trend is that many consumer electronics, PCs, and toys will have similar problems and suffer from chip shortages.

Reports show that appliance makers, for example, are struggling to keep up with demand, leaving consumers unable to buy products powered by even simple processors such as microwaves, refrigerators, and washing machines.

Appliance maker Electrolux recently described its supply chain as “strained” in many areas, particularly for electronic components, meaning the company could not meet the demand for all of its products in the past year.

Electrolux predicted that the situation could deteriorate further in the next few months.

Looking ahead to 2022

For PCs, for example, the prediction is that chip shortage will continue for some time as consumers continue to order more devices.

However, it is only when demand declines in 2022 that production will be able to recover.

And while the global semiconductor shortage continues, consumers will often find few alternatives to wait to receive the products they’ve purchased.

Other options include buying second-hand or choosing from other suppliers, but one thing is certain: you can’t expect stocks to be full at any given time.

Conclusion

If you intend to buy a smartphone or even a car, the tip is to plan ahead!

Don’t expect to be able to buy or order something and get it right away, look for other suppliers and products, be prepared to get a different product than what you planned to buy, or literally take what is available.

Have you been impacted by the chip shortage in the market? Tell us in the comments.