Bad News For Electronic Gadgets’ Lovers: Prices Are Heading Up Because of Microchip Shortages
Among all the pandemic’s unexpected consequences, one of the most disruptive for the market of consumers’ electronics could well be the lack of specialized semiconductors. The result is a severe shortage of microchips available for suppliers. Before your favorite gaming gadget – tablet, mobile, or console – becomes too expensive, you may want to click here and find some fresh inspiration on what other gaming options are available to you. But what is actually happening?
Some market experts have defined the situation as “a perfect storm of pandemic chaos, trade-war stockpiling, and a paradigm shift in work-from-home devices.” The result is a full-fledged chip squeeze. Anything with a chip is feeling the consequences, including cars, smartphones, games consoles, tablets, and laptops. As a result, electronic gadgets and cars will either be in shorter supply or more expensive throughout 2021. While people were confined at home in 2020, sales of consumer electronic items went through the roof. Extra monitors, new computers and tablets, gaming consoles, and the like all use sophisticated chips.
The situation was already awkward when US-China tensions caused Huawei to stockpile semiconductors last year. The tech giant feared American sanctions would cut them off from global chipmakers. A further squeeze on the market was the obvious consequence. Then automakers found out they could not reap the benefits of the increased drive of consumers to buy new cars. The specialized semiconductors they need could not be sourced: manufacturers had prioritized consumer electronics and could not keep up with all the orders. Giants like Ford and Volkswagen were forced to cut production. The delay in production, caused by chip shortages, could affect nearly one million vehicles in the first quarter of 2021. Other industries are beginning to feel the brunt too.
The lack of specialized electronic components is apparently affecting the sales of specific iPhone models. Chip shortages are also limiting the availability of Sony’s new PlayStation 5 and Microsoft’s latest Xbox. The complexity of the supply chains is the main culprit. An increasing number of major chipmakers are extremely concerned by the looming crisis. Among them are giants such as Qualcomm, the world’s biggest mobile chipmaker, and its rival AMD. Both companies are primary suppliers to leading consumer electronics producers.
A complex supply chain means that the US giants design the semiconductors but do not, for the most part, manufacture them. Asian companies such as Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea’s Samsung are the ones who produce the components. Now Samsung supplies are jeopardized, for example, by the damage caused to its Texas factory that had to halt production because of a severe winter storm.
The case of Taiwan, where some of the world’s biggest and most advanced foundries are located, stands out in the mass. Taiwanese manufacturers are under pressure from carmakers and governments. The auto industry is a Taiwanese top priority, and the island announced plans to increase the production of car chips. Still, its factories are already working at full capacity. Moreover, rolling out 5G technology requires myriad chips to build a new generation of phones, wireless infrastructure, and other equipment, according to GlobalFoundries, a chipmaker with factories in Singapore and headquarters in the US.