Business

How will global chip shortage affect you?

These are largely invisible, but computer chips are at the heart of digital products around us. It can stop production if there is a problem with the supply of chips.

The first signs of the problem were taken last year when players struggled to get new graphics cards. Apple has postponed the release of the new iPhone model, and the latest Xbox and PlayStatation game consoles have struggled to meet demand.

And then, on New Year’s Eve, the “chipagon-chip disaster” began in the automotive industry, which began to recover after the epidemic.

The new model cars have more than 100 microprocessors, and manufacturers can not provide all of them.

Technology companies later announced that they were experiencing a series of chip problems.

Samsung has announced that it will not be able to meet production orders for memory chips for its products and other brands.

And Qualcomm, which makes processors and modems for large smartphones and consumer devices, said it faces the same problem.

The impact of the epidemic

As with many problems around the world, the cause of the problem is the coronavirus.

There was an explosion in the sale of computers and other devices that allowed people to work from home in a limited way. In addition, they bought new devices to use in their free time at home.

Meanwhile, sales in the automotive industry initially declined sharply and cut chip orders.

But then, in the third quarter of 2020, demand for cars exceeded expectations and demand for consumer electronics continued unabated.

5G infrastructure

While existing chip manufacturers are increasing their capacity, opening new facilities is not so easy.

“It takes 18 to 24 months for a factory to open after the foundation is laid. Even if you build it, you have to adjust the production parameters, which takes time. It’s not something you can turn on and off,” he says. Windsor.

The creation of 5G infrastructure also increases the pressure on students.

Huawei placed a large order before U.S. trade restrictions prevented it from placing new orders.

In general, the automotive industry, which has no reserves for production, is currently experiencing difficulties.

General Motors

Recently, leading chip makers TSMC and Samsung have spent billions of dollars on a very sophisticated new 5-nanometer chip manufacturing process for their most advanced products.

However, experts say the sector as a whole suffers from low investment.

A recent report from Counterpoint Research said, “Second-tier manufacturers have reported lower profits, lower profits and higher debt in the last few years. It is difficult to open up new opportunities for small organizations in terms of profitability.”

And many of these chip manufacturers have responded by raising prices rather than producing additional students.

Chain effect

Windsor expects the chip shortage to be resolved in July at best.

Others say it may take longer.

The chipmaker told the Wall Street Journal that they will not be able to continue their orders and will only be able to place an order from a car manufacturer today after 40 weeks.

This can have costly consequences.

Consulting firm AlixPartners estimates that the automotive industry’s sales revenue will fall by $ 64 billion as it is forced to cut production.

Let’s add that the industry earns $ 2 trillion a year from sales.

Monopoly producers

This situation also has geopolitical implications.

The United States is still a leader in component design.

However, Taiwan and South Korea dominate chip production.

Economic expert Rory Green estimates that these two Asian countries produce 83 percent of processor chips and 70 percent of memory chips.

“Regardless of OPEC oil, Taiwan and South Korea have a monopoly on chip production,” Green said.

This raised concerns in the United States, and a lobby group described the crisis as a harbinger of future supply problems.

All 15 senators wrote a letter to US President Joe Biden urging him to promote production in the domestic market.

But the worst blow is China, which produces more cars than any other country.

Research firm IHS estimates that 250,000 fewer cars will be produced in the first quarter.

Demon ordusu

Beijing has long wanted to provide itself with the country in any case.

However, the United States has taken steps to prevent Chinese companies from using American technology to strengthen the Chinese military.

The current crisis has prompted the Chinese government to step up its efforts in this area.

‘More expensive’

There are a few things consumers need to consider right now.

Assembly line

For some car models, the waiting time will be longer and some devices will be harder to find.

The biggest players like Samsung and Apple have the purchasing power that can take first place in the list of preferred abilities.

However, smaller brands can be affected disproportionately.

Ben Wood of CSS Insight Consulting says the products will not become more expensive or cheaper over time as they normally would.

“So if you have a device you really want to buy, avoid waiting a few months because they’re cheap,” says Wood.

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