The global chip shortage is a crisis that’s currently playing out around the world in which the demand for semiconductor chips is greater than the supply. The crisis is affecting over 169 industries and has led to shortages of cars, games consoles, office equipment, and other electrical devices.
What’s caused the shortage and what does the short term look like?
What is a semiconductor chip?
Semiconductor chips are the basic building blocks of modern electronics. From the phones and computers we rely on for day to day communication, to pacemakers, cars and aircrafts – semiconductor chips are what makes these devices work.
Due to the current shortage, industries from phone manufacturers to soap producers, and everything in between is impacted. As a result, this has an impact on the availability of products we use on a daily basis, both in business and leisure.
Covid-19 is the primary cause of the shortage
Due to Covid-19 restrictions, people had to stay at home and this resulted in a high demand for electronic devices. Webcams, monitors, and computers were required for home working. Others purchased games consoles and entertainment devices to help pass the time. In the fourth quarter of 2020, traditional computer sales saw a 26.1% growth over the previous year.
Poor planning
Like most of the world, a lot of manufacturers shut down during lockdowns. This resulted in cancelled orders from a lot of the supply chain – including orders of chips.
One sector badly affected by this is the automotive industry. At the beginning of the Covid-19 crisis, car manufacturers canceled their chip orders due to concerns that the pandemic would negatively affect sales. The market bounced back quicker than anticipated and this led to car manufacturers having less chips in stock after suppliers went looking to other industries after initially having orders canceled.
Solving the crisis
The UK could play it’s part in bringing an end to the crisis. The UK has developed a reputation as a world leader for semiconductors in recent years. Today, it’s home to some of the biggest players in the global semiconductor industry.
Finding a long-term solution to the global chip shortage will be challenging. But with technology playing such an important role in our day to day lives, it’s crucial the problem is fixed. Semiconductor companies in the UK definitely have a role in addressing this issue, but it’s vital that support and investment is provided to overcome the challenges.
Watch out for counterfeits
During the pandemic, a shortage of face masks and sanitiser provided an opportunity for fraudsters to make a quick buck. When demand is high but supply is low, criminals often find a way to exploit the market. According to some sources, counterfeit semiconductors are already creeping into the market.
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