Microchips are the driving force behind so many of the devices that we use for travel, fitness, entertainment and more. Cars, phones, medical devices and industrial machinery all use microchips. Over 900 billion microchips were created in 2020 alone, and our society is reliant on them. There has been talk about the current global microchip shortage, but many people don’t know exactly what it means for them as an individual or business. By the time you’re done reading this article, you’ll have a much better grasp of the impact the microchip shortage may have on you, both in the present and in the future.
What is causing the global microchip shortage?
There is no single factor causing the current microchip shortage. Instead, the issue is being caused by several problems coming together all at once. Individually each of these issues could cause a disruption in supply but taken all together it’s become a global problem.
The reality is that COVID-19 has made it difficult to keep global supply chains running smoothly. The shipping issues have impacted several industries, including computer microchips. It is difficult to say when the supply chain will return to normal as supply chains have been disrupted all around the world.
Trade tension between America and China
Many of our microchips here in the west come from China. Trade tension between America and China has resulted in cuts to the supply of microchips to the west. It remains to be seen if this will have a long-lasting effect.
There was a major fire at the Renesas Electronics plant in Japan. The factory was forced to close for 6 months before it was able to return to previous levels of production. The Asahi Kasei plant was also forced to close after a fire. Finally, in early 2022 a fire occurred in a Berlin plant that supplies equipment necessary for the production of microchips. The affected locations are working diligently to return to normal production levels.
Even the weather has contributed to the shortage. A winter storm in 2021 forced the closure of multiple factories in Texas which put production behind by a few months. In addition, Taiwan experienced its worst drought in more than 50 years which left them struggling to produce enough microchips to keep up with demand.
What industries does the microchip shortage affect?
The microchip shortage is affecting many industries at the time of writing. Some of them are more likely to have an effect on your life than others. Here are some of the most relevant industries to keep an eye on in the coming years. Being aware of which industries were hit may make it easier for you to plan:
Microchips are used in the production of cell phones. Apple is reportedly producing 10 million less iPhone 13s due to the global shortage.
The auto industry
The average car can use anywhere between 1000 – 3000 of these microchips and the shortage has had an effect on the auto industry. Some automotive production facilities are behind schedule, and this created a boom in the used car market. With microchip production slowly returning to normal levels, the future is looking hopeful for the auto industry.
Graphics cards and PCs
The microchip shortage has impacted the production of graphics cards and consumers who need a more powerful computer. Anyone working in graphics design or similar industries that require high performance graphics cards may encounter higher prices.
Video game consoles
During the COVID-19 lockdowns, many people turned to video games to keep themselves busy. This resulted in sales of gaming consoles going up with both Sony and Microsoft. In addition, both Sony and Microsoft released a new generation of consoles which furthered the burden on the supply chain.
Credit and Debit Cards
Microchips are also used in the production of credit and debit cards affecting the issuers of these cards.
What it all means
For the average person, this shortage may have some repercussions for the future. Products in the industries above may be pricey or difficult to find for a while. It’s tough to say exactly when the supply of microchips will return to normal.
Microchips are not the only industry affected by the global supply chain issues, but they’ve had some additional issues. Microchips are essential for a wide variety of products that many take for granted. Consumers should be prepared for the possibility of reduced supplies or increased costs.