Short Supply & Can It Affect You?

Why Are Semiconductor Chips in Short Supply & Can It Aff ect You?

ductor microchips. What’s causing this scarcity and why should you care? Here’s everything we know.

If you’re wondering what caused a delay in the release of iPhone 12 and why fi nding the latest consoles for PlaySta on 5 has been so diffi cult, blame it on the global semiconductor chip shortage.

With the onset of coronavirus pandemic, higher demand for mobile phones, laptops and the usage of internet has increased the requirement for semiconductor chips. From non availability of consoles to delayed car deliveries, businesses across the globe are facing shortage in the supply of semicon-

South Korean tech giant Samsung Electronics , one of the world’s largest makers of chips and consumers electronics said that the world is grappling with the fallout from a ‘serious imbalance’ in semiconductors globally.

Earlier, in February US President Joe Biden pledged to address the shortage which had forced US automakers and other manufacturers to cut produc on and alarmed the White House and members of Congress.

But, what’s causing this scarcity and why should you care? Here’s everything we know.

What Are Semiconductor Chips?

Semiconductors are materials like silicon which can conduct electricity. These are also known as chips, semis, and can be found in electronic devices such as computers, smartphones,appliances,gaming hardware and medical equipment.

These devices fi nd widespread use in almost all industries especially in the automobile industry.

Why Is There A Shortage?

During the pandemic, millions of consumers stocked up on laptops, gaming consoles and electronic products.

According to market tracker Interna onal Data Corp Sales of laptop and desktop computers exceeded 302 million in 2020, a 13 percent increase from the year before and the most since 2014.

The automobile industry was shut for a few months but as the restric ons were li ed, the car sales especially in China began to increase. However, the produc on of chips was s ll low, causing an imbalance in the supply and demand ra o which triggered a global chip crisis.

This shortage further spread to a range of other consumer electronics, including smartphones, refrigerators and microwaves.

How Is Automobile Industry Dealing With The Shortage?

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Continued from Page 5 This crisis has forced car manufacturers such as Motors Co, Ford Motor Co, Volkswagen AG, Surbaru Corp, Toyota Motor Corp and Nissan Motors to scale down their produc ons .

According to data fi rm IHS Markit, this shortage could impact 1.3 million units of global light vehicle produc on in the fi rst quarter.

Meanwhile, Samsung Electronics had to shut down its factories temporarily owing it to the crisis.

Will You be Able to Buy 5G devices?

According to Reuters, the introduc on of 5G phones and laptops have picked up faster than expected.

Chip manufacturers such as Qualcomm and Foxconn whose chips feature in Samsung phones and Apple devices respec vely have warned of the chip shortage aff ec ng supply chains to clients.This means that 5G devices will be diffi cult to buy owing to global chip shortage.

The report by Reuters further suggests that US semiconductor companies account for 47 percent of global chip sales, but only 12 percent of global manufacturing is done in the United States.

Why Should You Care?

If the global shortage con nues to increase, this means that you won’t be able to buy popular products such as laptops, iPhone devices, PlaySta on consoles and cars too.

Recently, Samsung decided to shut down its factories amid the global crisis. This could mean that prices of tech gadgets could go even higher and will be heavy on your pockets.

When Will The Shortage be Resolved?

US President Joe Biden has intervened to resolve this issue and has sought $37 billion in funding for legisla on to supercharge chip manufacturing in the country.

Meanwhile, semiconductor industries have also rammed up their produc on process but has warned that the increase won’t be rampant.

Intel, has recently announced to invest $20 billion (roughly Rs. 1.4 lakh crores) in two new factories in Arizona. However, this does not mean that the factories can meet the current demand, experts say that the scarcity will last for more than a year from now at least.

Is the Chip Shortage Benefi ng Electronic Industries?

With the demand of consumer electronics rising Neil Campling, an analyst at Mirabaud Securi es told The Guardian,“this gives companies the power to raise prices and pass on higher costs”.

Lenovo Group also said that its profi t margins took a hit a er the global chip shortage. Demand for laptops have increased because of purchases by people working at home, which has also led to the doubling of stock prices since August.

Source: h ps://www.thequint.com/