The technology industry is at a crossroads
Computer chips, also known as semiconductors, are used in millions of items today, including cars, washing machines, cellphones, and more.
And there aren't enough of them to match industry demand right now. As a result, a lot of popular products are out of stock.
Purchasing a PS5 game console has become nearly impossible. Production at Toyota, Ford, and Volvo plants has had to be slowed or temporarily halted. Smartphone manufacturers are also feeling the strain, with Apple predicting that the scarcity will hurt iPhone sales.
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| PS5 Chipset image |
Even companies that aren't directly related to computer chips, such as CSSI International, a US-based manufacturer of dog grooming machines, are feeling the effects.
These issues have already been noticed by certain customers. Because new vehicles, which are sometimes packed with thousands of tiny chips, are in short supply, used-car sales are on the rise.
The shortage began after the Covid-19 epidemic, which destroyed most of the planet in 2020 and resulted in significant limitations. Although the impact was not seen during the pandemic due to lesser demand for goods, the situation has radically shifted.
While demand for electronic goods increased across the board, companies were unable to provide it due to a chip shortage.
Supply chain disruptions caused by the pandemic, a rapid increase in demand for electronic goods as more people work from home, and a lack of investment in chip manufacturing capacity are all contributing to the global chip shortage.
It's probable that even more products will be affected by the shortfall in the following months, particularly around Christmas.
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| Global chip shortage may spoil festive season sales |
So, what exactly is going on here?
In current products, the chips in short supply serve a variety of activities, and there are sometimes multiple of them in a single device.
As worldwide demand for semiconductor chips continues to surpass supply, other industries have been impacted.
Vehicle manufacturers have been impacted the hardest by the chip scarcity around the world, with Volkswagen, Ford, Renault, Nissan, and Jaguar Land Rover among the worst-affected.
Due to a shortage of chips, which are utilised in numerous automotive components like digital speedometers, infotainment systems, computerised engine management, and driver assistance systems, all of these companies are set to lose billions. The majority of corporations have stated that the automobile supply interruption might extend until at least 2022.
The increased input costs could be due to a global semiconductor scarcity. Given the paucity of chips, it wouldn't be shocking if other carmakers raised their pricing as well.
According to Goldman Sachs, the global chip crisis is far from finished, and prices of numerous electronic goods and components might rise by 1% to 3% in the near future.
While major chip manufacturing companies have declared plans to scale up production lines, analysts estimate that the new semiconductor chip manufacturing plants will take at least two to three years to build.