Throughout 2020 the availability of equipment, in particular laptops, tablets and phones, was drastically reduced, and it now looks possible the issues could persist through 2021.
Global semiconductor shortage
One of the main reasons there are so few devices available is a global semiconductor shortage. The processors that operate PCs, laptops, tablets (as well things like smart TVs and electric vehicles) are made with semiconductors: materials like silicon are used to create ‘integrated circuits’ (or ‘chips’) that are the brains of almost all electronic devices today.
Huge producers TSMC, UMC, SMIC and Samsung Foundry have over 60% of the market share, and TSMC, Samsung and Intel are the only three companies in the world that can produce the most advanced semiconductors needed by the likes of Apple, AMD and NVIDIA.
Supply and demand
The shortage has arisen due to a sustained increase in demand and the impact on operations as a result of the pandemic.
The global semiconductor industry suffered its poorest year for almost two decades in 2019, according to investors.com, with revenue falling 12%. As the key players in the industry worked to scale back production to avoid devaluation of their output, the Coronavirus completely changed buying behaviours across the world. People spending more time at home wanted more technology.
Globally the demand for devices, laptops in particular, reached levels in 2020 that have not been seen for a decade. Added to that is the recovery of production in the electronic vehicles sector, which has been much quicker than anticipated following initial reduction in Q2 2020.
The small number of major manufacturers in the industry, and the complexity of the manufacturing process mean that increasing supply is not an immediate ‘flick of a switch’ matter: making a semiconductor is a highly involved manufacturing processes, with lead times of 26 weeks being normal to produce a finished microchip.
Chip shortage continuing
As the Guardian reported in March 2021, though production of chips is now stable following COVID-19 operational disruptions, the surge in demand for tech in all areas of life and work isn’t slowing down, with even Apple, the world’s most valuable company delaying the launch of the iPhone 12 as a result of the shortage.
Semiconductors are so pervasive that the value of the microchip industry passed the oil industry for the first time in 2020, with the 30 largest companies combined worth an estimated $2.5 trillion, according to Riskhedge.
Reuters reported that Joe Biden met with company leaders on Monday 12 April, discussing US plans to invest in semiconductor manufacturing and seeing the shortage as a “top and immediate priority”.
Though both short-term and long-term plans were discussed, the reality is that there will continue to be a shortage of devices like laptops, tablets and phones for some time yet.
If you need any hardware devices, now or in the next few months, we advise letting us know as soon as possible so we can look for any stock available.
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