Back in April we updated our previous info about the global semiconductor shortage, after Joe Biden and his team met with manufacturers.
It’s got the stage now where the chip shortage has its own Wikipedia page.
This page describes the causes of the shortage, the main one being the COVID-19 pandemic and the ‘double whammy’ of chip production site closures and the increased demand for devices due to working and learning at home.
The tensions between China and the US, and the drought in Taiwan, are also covered.
When will the shortage end?
So, given the progress made against Coronavirus, presumably the chip shortage will be over soon?
Probably not. As the BBC reported in July 2021, Intel CEO Pat Gelsinger has warned that it could be “a year or two” before supplies return to normal.
Most of the large manufacturers, Intel included, have plans to invest hundred of billions in facilities over the coming years, but that takes time. In the short-term, there’s likely to continue to be an imbalance between supply and demand.
Takeshi Kamebuchi, a director of Toshiba Electronic Devices & Storage, told Bloomberg “the supply of chips will remain very tight until at least September next year. In some cases, we may find some customers not being fully served until 2023.”
What is affected?
Cars and vehicles: all vehicles have chips in them these days, and electric vehicles have more than others. Many car makers, including VW, Ford and Toyota, have announced reductions in production as a result of the shortage. It’s compounded by the fact that, at the start of the pandemic, they expected demand for new cars to fall so cancelled orders for chips. Back in April BMW closed the Mini plant in Oxford due to the chip shortage.
Gaming consoles: another combination of factors have led to a shortage of consoles. New devices from Sony and Microsoft (the PlayStation 5 and Xbox Series X) created demand, while people furloughed and with fewer options for leisure time wanted consoles to use. There have been reports of certain consoles being sold on eBay for double their retail price.
Video cards: like consoles, video or graphics cards are popular with gamers, but the increase in cryptocurrency mining has also contributed to a shortage, as the chips used on these cards are better for mining than normal PC chips.
IT equipment: for the same reasons, most IT equipment is in quite short supply. Things like laptops, tablets and smart phones are obtainable, but lead times are often longer and there’s been an increase in prices for most items. Server hardware and network equipment is similarly affected, and one of our suppliers told us recently they were struggling to source a certain type of device.
It looks likely the shortage will continue for at least the next six to twelve months. That means it’s not necessarily a given that things will be easily available when they’re needed, or at the price that’s expected:
- It’s likely that there will be longer lead times for hardware for the next year; and
- It’s likely that prices for hardware will increase or remain higher than they were pre-pandemic.
This means planning becomes more important. If you think you’ll need equipment over the next few months, let us know as soon as possible.
It’s not just work either. Many toys and home electrical appliances have chips too, so it might be an idea to think about Christmas a bit earlier this year!
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