Everything You Need To Know About Global Chip Shortage

Everything You Need To Know About Global Chip Shortage

Even though it should have been predictable, the global chip deficit, also known as the microchip shortage, seems to have caught everyone by surprise.

Currently, silicon chips are found in almost everything, including phones, computers, household appliances, and even automobiles. Furthermore, as technology advances, the greatest processors are no longer exclusive to the newest gaming PCs.

Significant chip shortages have happened before; for example, in 1988, due to excessive demand and in 2000, due to a scarcity of various Intel items, significant shortfalls of chips occurred on several occasions. Afterwards, in 2011, a Japanese earthquake led to a severe shortage of NAND memory and screens.

Chip shortages frequently result from issues with the supply chain or human labor. But instead of altering the production process to make it less susceptible to frequent needs, the sectors that depend on these chips have mostly continued doing business as usual.

And now that the most recent shortage, which started in 2020, is affecting every aspect of technology, from cars to the most cutting-edge graphics cards and gaming consoles, everyone is frantically trying to understand what the global chip shortage is, why it’s happening, and how long it will be before things get better.

The answers to some of those questions are simpler than others, but we’ve gathered as many resources as possible to help illustrate how we reached this point.

 

WHY DOES THE WORLD HAVE A CHIP SHORTAGE?

A global chip shortage occurs when the semiconductor industry cannot create enough chips to meet the needs of customers from other sectors, which impacts both. Given that they are present in almost all current electronic devices, these chips are essential to the technology sector.

Interlacing tiny semiconducting analogue circuits into silicon layers, integrated circuits are made. Over the past 70 years, this innovation has transformed technology and the globe, but it has also produced a challenging issue.

Significant shortages of every consumer good that contains electronics or uses them at some stage in its production could be caused by unanticipated outages. Everything from the standard of city train service to the transportation of food to supermarkets may be impacted by this. It affects far more than just how easily accessible consumer items like the greatest monitors, iPads, and PCs are.

We are currently living in such a hectic period. Over the past two years, individuals have faced shortages of almost everything, which has had a significant impact on worldwide price inflation for most consumer items.

WHY WAS THERE A CHIP SHORTAGE IN THE WORLD?

The ongoing COVID-19 pandemic, which began in late 2019, is mostly to blame for the most recent global chip scarcity. This led to two primary outcomes: supply chain problems brought on by labour shortages and a 13% rise in PC demand worldwide due to the transition to a work-from-home economy.

The growth of cryptocurrencies, particularly in the computing sector, worsened the scarcity. Since miners of these digital currencies introduced an unanticipated demand for these components, graphics cards and CPUs have been hard to acquire, making it even harder for the typical customer to find them.

 

WHEN WILL THE WORLD CHIP SHORTAGE BE OVER?

Numerous industry experts have predicted when the semiconductor industry will recover from this global chip shortage, including representatives from Intel and AMD. Unfortunately, it is expected to continue through 2023.

It will take years for Intel’s CEO Pat Gelsinger’s company to recover fully since “demand increased to 20% year-over-year and disrupted supply chains produced a huge gap…and that rising demand has remained.” Moreover, Michael Dell, the co-founder and CEO of Dell, anticipates the scarcity will continue for a few more years.

Like other industry leaders, Lisa Su, CEO of AMD, predicts that the scarcity will start to ease in late 2022 since “the epidemic has only increased demand to a new level.” This was supported by prediction estimates from the industry analysis company Gartner, which predicted that it would continue through 2022 as well.

To improve chip manufacturing, TSMC and Quanta Computer, the only manufacturers of some of the greatest MacBook and Mac models, have been looking into moving or opening additional facilities. However, this won’t help the shortfall for years. Although it has been a similarly lengthy process, TSMC has been attempting to open new facilities in the US.

However, there is hope because recent changes have made the scarcity less severe. The supply of graphics cards and CPUs has gradually increased, which has served as a reasonably reliable indicator of the shortfall status. The decrease in Ethereum mining and cryptocurrency mining, in general, is one of the leading causes.

Chip manufacturing facilities built before the pandemic are beginning to operate. Some of the demands from work-from-home and hybrid workforces for new technology for their professions have mostly been satisfied and are unlikely to increase again the way they did in 2020.

It’s difficult to determine how close we are to a full recovery, if one is even achievable, given the constant influx of new digital items and the growing influence of computers in formerly analogue goods and services.

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