The Global Chip Shortage: What is it and How to Tackle it?

The global tech industry is under pressure right now due to a worldwide shortage of computer chips. At present, there are not enough semiconductors available to meet demand. With more and more products on the market relying on these, this problem is becoming increasingly challenging to deal with. But why is there a shortage, and what can businesses do to counteract it?

What’s Caused the Shortage?

The semiconductor shortage came about from a perfect storm of bad decisions, bad luck and increased demand. During the pandemic, demand for electronic devices surged as people were stuck in their homes.

The shortage was exacerbated by changes taking place in the automotive industry. As the pandemic started, many manufacturers cancelled their semiconductor orders due to fears that the economy would tank. Those supplying the chips switched their focus to consumer devices to meet the higher demand for these products. A shortage of car chips followed this.

Then, unlucky weather events meant that the few chip manufacturing plants in the world that continued to run during the pandemic were subject to lengthy production delays. When all of these factors combined, they led to a worldwide shortage.

Chip of Intel 8008 microprocessor

What are the Effects of the Chip Shortages?

The cost of devices that rely on semiconductor computer chips has increased because of the increased demand. Additionally, in many cases, the production of goods has been delayed, the knock on effect meant that it has been all but impossible to purchase some electronic devices.

Fewer cars are being produced at the moment. Other tech companies like Apple have warned that the production of their iPhones could be delayed, even though they stockpiled chips before the shortage became apparent. Gaming console supply has also been affected, and it is still challenging to get hold of the latest Playstations and Xboxes.

The shortage doesn’t seem likely to end any time soon either. Current estimates suggest that demand will outstrip supply until early 2023. As such, prices and supply will continue to be impacted by this problem throughout the coming year.

What Can Companies Do?

There are a few things companies can do to tackle the issue. Partnering with an electronics design company is likely one of the best solutions as they can help you design for availability. An electronics design company such as Ignys can help businesses choose the components they need and minimize the risks of not getting the parts they need.

Businesses might also need to delay the launch date of their products. This may only be suitable for companies with enough resources to wait for the parts, but this could lead to significant savings later. Additionally, if the funds are available, ordering in bulk for the future is another viable option for businesses that will allow them to meet demand during the shortage.

Conclusion

On the whole, the global chip shortage has been causing problems for manufacturers and consumers over the past 18 months. This has caused delays and price increases in various industries. It seems set to continue during the coming year, so companies need to react and plan accordingly to continue production.

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