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Chip Shortages Felt Across Multiple Industries Including IT



Shortages continue to be a global issue as the world deals with the lasting repercussions of the pandemic. While toilet paper and chicken wings took center stage in 2020 as shortages felt immediately by consumers, unfortunately those aren't the only industries feelings the effects of the global shutdowns, halts on manufacturing and spending, and changes in consumer behaviors in response to the Covid-19 pandemic. The pandemic also shocked the global semiconductor supply chain. This is leading to lasting shortages in surprising places most notably the car industry.

It's 2021 and we're living in a technological world. Chips are a vital component to many surprising items including toasters, televisions, refrigerators, coffee machines, cameras, LED bulbs, military tanks, alarm systems, and airplanes. Not to mention computers used for home and work. Vital industries including renewable energy, artificial intelligence, robots, and cybersecurity also lean heavily on the usage of chips. In fact, chips are quickly being coined as the supreme global resource prompting a new 21st century catchphrase among policymakers and diplomats: "Chips are the new oil." While semiconductors were invented in the U.S. only 12% of the world's supply are currently manufactured in American factories, leaving most of the production in Taiwan, South Korea, and China who have been hit by sanctions following the pandemic and are in turn making it even harder for other firms to get ahold of them. While production on chips is back to normal, new surge in demand driven by changing habits fueled by the pandemic have sparked a supply issue that is not easily or quickly solved.

While the car industry has been the hardest hit industry so far, Alan Priestley, an analyst at Gartner stated that the average person on the street is bound to be impacted by the chip shortage in one form or another. Recently Samsung reported that the chip shortage is hitting television and appliance production and LG admitted shortage is a risk. Samsung's co-chief executive and mobile chief Koh Dong-jin stated that there is a serious imbalance in supply and demand of chips in the IT sector. The company even stated they may have to skip the launch of the next Galaxy Note smartphone.

While there is a scramble to catch up to the demands of chip shortages, it's expected to take some quite a bit of time to catch up. Many experts do not expect supply to catch up with demand until at least the end of 2021. Neil Campling, media and tech analyst at Mirabaud states that: "there is no sign of supply catching up, or demand decreasing, while prices are rising across the chain, this will cross over to people in the street. Expect cars to cost more and phones to costs more." These shortages will continue to trickle down to all industries that use chips including laptops and computers. Companies such as Dell, HP, Acer & Lenovo, have all announced recent price increases as well as longer than usual lead times.