Chips shortage, how will we manage it?

June 3, 2021

The lack of chips is posing a serious setback for the industrial sector. Today, any electronic device needs these chips to function, so their shortage is becoming a headache for manufacturers.

Also for users, this chip shortage is creating problematic situations, since the prices of the devices are increasing or even being difficult to find them (as is the case of graphic cards for computers, or the new generation consoles PS5 and XBOX Series X).

Why is there a global chip shortage?

At this moment we are facing a situation where the demand for semiconductors is greater than the capacity to produce them. This fact has produced a global chips shortage, affecting all industrial sectors.

The main causes of chip shortages are:

  • Computer chips are in short supply due to a sudden increase in demand related to the increase in teleworking (due to the pandemic).
  • The arrival of 5G networks allows millions of devices to connect, which is why the Internet of Things has generated a great demand for chips.
  • Smartphones are in high demand globally.
  • Cryptocurrency mining monopolizes many computer components, especially graphic cards, which has left the market short of supplies.
  • Some disastrous events such as fires, factory problems, frosts have decreased chip production.

How long will the microchip shortage last?

All indicators suggest that the shortage of chips will last for at least two more years. This means that an adequate distribution of these vitally important electronic components for any digital device will not begin to be established until the middle of the year 2023.

How companies are managing the chips shortages?

The chip shortage is causing tense situations at the business and industrial level. For example, the automotive sector is being seriously affected as the mobile phone sector monopolizes a large part of the chip in the market due to its ability to pay better prices.

Even so, companies such as Xiaomi or Samsung have communicated their intention to pass this higher cost of chips to consumers. Apple also had to delay the launch of its iPhone X2 due to chip shortages and is struggling to maintain the proper distribution globally.

Chips shortage has a direct consequence for all consumers, an unstoppable increase in prices until manufacturing would be able to meet the demand again.

Televisions, cars, smartphones, computers and most electronic devices are now priced higher than just a year ago. All due to the immense demand for existing chips that cannot be covered under current conditions.

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