Implications of the Worldwide chip shortage

The last 12 months have been a perfect storm of events that’s been causing a worldwide shortage of chips which is now resulting in in increased prices and reduced availability of all sorts of products.

From inclement weather to trade wars, cryptocurrency mining to a pandemic, the world now faces increased demand for chips just when availability has dried up.   The situation shows no signs of improving any time soon meaning manufacturers are being forced to scale back on production of products.

Car manufacturers have discovered they cannot purchase enough chips to produce the cars they had planned on producing. General Motors have opted to not include a fuel management module in certain vehicles, not what the world needs when we are also facing an environmental disaster!

Some used cars are now worth more than the purchase price of a new matching model as the wait times are getting excessive.  Such is the demand from the cryptomining market for graphics cards that AMD and NVIDIA have started to manufacture older model graphics cards just to keep up with the demand and to get at least some cards available for consumers needing a card for gaming.  

Sony and Microsoft have both launched new consoles only to find out that they too couldn’t keep up with demand.  Like graphics cards, what consoles are available are often snapped up by scalpers looking to take advantage of the situation to make a quick buck.

Recently there have been reports of several instances of people trying to smuggle processors and other chips out of China by any means possible, using techniques usually reserved for smuggling drugs.

Where and when will it end?   There are indications that the chip shortage should begin to abate sometime in the third quarter of 2021 for at least certain sectors.  Manufacturers such as TSMC have begun to ramp up production of chips used in the automotive industry which should easy car production difficulties. 

Other chip manufactures are also expected to increase production which should lead to increased availability and reduced costs across other industries but with global shipping still backlogged and with a lack of ships and COVID vaccinated crews, there is no certainty when those vital chips might make their way to where they are needed.