There is a growing global shortage of semiconductors, potentially leading to price rises for many consumer products, including mobile phones, games consoles, TVs, and cars.
The shortage of chips started lasted year, and has been steadily getting worse.
The problem began as a temporary delay in the supply line as the coronavirus pandemic led to factories shutting down.
However, despite production levels returning to previous rates, an increase in demand due to changing habits spurred by the pandemic has pushed the situation to a crisis point.
Demand has been driven upwards by a spike in TV and home computer sales, as well as new 5G-enabled mobile phones and the launch of new games consoles.
The semiconductor shortage has even led Apple, the world’s largest purchaser of semiconductors, to delay the launch of its latest device by two months.
“Chips are everything,” says media and tech analyst at Mirabaud, Neil Campling. “There is a perfect storm of supply and demand factors going on here. But basically, there is a new level of demand that can’t be kept up with, everyone is in crisis and it is getting worse.”
Samsung, the world’s second largest purchaser of semiconductors, announced last week that the launch of its latest smartphone may need to be delayed due to the shortage. This is despite Samsung itself being the world’s second-largest manufacturer of semiconductor chips.
“It is incredible that Samsung sells $56bn of semiconductors to others, and consumes $36bn of them itself, finds it may have to delay the launch of one of its own products,” Campling said.
Car manufacturers have found themselves at the back of the queue for supplies having cut their orders last year when vehicle sales fell.
“The worst affected have been autos because they were last to the party; if Apple is spending $56bn a year and growing who are you going to keep supplies going to first?” added Campling.
The global shortage of semiconductor chips will persist for quite some time. Manufacturers are already set to bump prices for the second time in less than 12 months, and it can take up to 2 years to get factories up and running to produce chips.
“There is no sign of supply catching up, or demand decreasing, while prices are rising across the chain,” said Campling. “This will cross over to people in the street. Expect cars to cost more, phones to cost more. This year’s iPhone is not going to be cheaper than last year.”
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