By now you have probably heard that a shortage of electronic components is delaying the production of everything from vehicles to credit card terminals that read the electronic chip of a credit card. The severity of the global chip shortage has gone up dramatically over the past few weeks and it appears that it is about to get much worse. Millions of people will be impacted. While we used to think of semiconductor chips as something our computers needed, chip technology has spread from computers and cars to toothbrushes, televisions, dryers, refrigerators and many more products, including cell phones. The demand has simply surpassed the supply and now everyone is feeling the pinch.
A recent CNBC reports predicts that the average person on the street is bound to be impacted by the chip shortage in one form or another. Tech giant Samsung said the chip shortage is hitting television and appliance production and may even skip the launch of the next Galaxy Note smartphone.
What’s at risk? Virtually anything that uses electronics, from credit card reader terminals to toasters. The problem affects all aspects of manufacturing, from little people to big conglomerates and that filters down to the consumer level. Companies in China who were hit by sanctions are boosting their stockpiles of in-demand chips to try to ride out the storm, but that’s making it even harder to obtain. The automotive sector relies on chips for everything from the computer management of engines to driver assistance systems. Companies like Ford, Volkswagen and Jaguar Land Rover have shut down factories, laid off workers and slashed vehicle production.
What’s the Effect? Some carmakers are now leaving out high-end features as a result of the chip shortage. Nissan is leaving navigation systems out of cars that would normally have them, while Ram Trucks have stopped equipping its 1500 series pickups with an “intelligent” rearview mirror that monitors for blind spots. Rental car companies are feeling the effects as they’re unable to buy the new vehicles.
The Outlook The chief executive of German chipmaker Infineon said Tuesday that the semiconductor industry is in unchartered territory, adding that he thinks it will go on for 18 months. It will take time until supply and demand are rebalanced, and it will likely not be resolved until 2022. U.S. chip maker Intel recently announced in March that it will build two new chip plants in Arizona, but it will take two or three years before those new plants come online. For the time being, chips that run cars, medical devices, airplanes, smart appliances, or even wearables will be scarce. In a year, approximately around 1 trillion chips are made and for every single person on the planet, there are an average of 128 chips used.
Blame the Pandemic The pandemic forced people to work from home and students were forced to attend school through online classes. Businesses scrambled to set up remote work systems and required more cloud infrastructure This led to upgrading computers, more people started playing video games and watching Tik Tok videos. Basically, the pandemic changed consumer behaviors as more people started buying personal computers, new phones, and tablets, etc. so they could work from home.