GLOBAL CHIP SHORTAGE

GLOBAL CHIP SHORTAGE

Electronic microchips, also known as microprocessors or semiconductors, are essential commodities in the present world.  As the world becomes more and more data-oriented, and as the technology revolutionizes on and on, the demand for these chips keeps increasing. However, currently, the world is suffering from a shortage of these precious little jewels. The reasons and impact of this global chip shortage are what you will find in this article.

REASONS

Let me take back to the time when everything was normal-normal and not covid-normal. Before the pandemic, the IoT started to show its presence, and the production of electronic items with these chips was at its peak. Those products include automobiles, electronic appliances, computers, smartphones etc. However, due to Covid, many companies stopped their processes, and these processors’ production was on a break. Automobile industries were also under a stoppage; therefore, there was less demand from that side.

But is the overall demand low? No. Since the virus started a work-from-home concept, the need for smartphones and laptops increased. Unfortunately, the chip-producing companies didn’t keep up with the demand, and soon the market met break-even with supply. As soon as the automobile industry resumed its production, the demand overtook supply, and shortages occurred.

The automobile industry is the primary customer of these chip producing companies due to new advanced vehicles that use several chips for internal and external processes. Therefore, when the situation eased up from the worst virus phase, the automobile industry saw a hike in its production. Consequently, it meant more chips, and this is where the shortage occurred.

Some major chip manufacturing plants in China and Japan burned down, further adding fuel to the already depreciated amount of these chips available.

IMPACT ON OUR DAILY LIFE

This chip shortage has impacted our purchases to a great extent.

Simple economics says when demand exceeds supply, price increases. This is happening in the world right now. Automobiles, smartphones, appliances, and almost everything that contain these chips are sky-rocketing in terms of their prices. 

This shortage is the reason why the iPhone 13 is more out of reach than ever. Or the new Honda Civic seems a dream. The Apple CEO himself admitted that they had trouble producing the new iPad model. 

President Joe Biden has signed new amendments for increasing the production of these worthy microprocessors. Similarly, China has offered subsidies to companies producing these chips. But, of course, you know the problem is more significant than it looks when the world superpowers chip in for the chips (no pun intended). However, one thing is for sure; technology is on a boom! 

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