The COVID-19 pandemic has affected almost every aspect of our lives, not to mention the industries we depend on both professionally and personally. One that might not immediately spring to mind for many people is the production of electronic devices, and, in particular, the chips that sit at the heart (or maybe the brain…) of such products. It should though. Semiconductors – including memory chips, microprocessors, and integrated chips – have been in short supply in the tech industry, and all those that rely on them are in the midst of a genuine crisis. While Apple is better placed than many to ride out the storm, nobody is quite sure at this point when it will end.
What’s the problem?
Like so many workplaces around the world, the factories that produce these vital components had to close as the COVID-19 pandemic escalated.
This inevitably led to significant production delays. When they were able to get back operating, the pandemic had caused such a spike in demand for things like new computers, smartphones and smart home devices that supply could not match demand. Carmakers, who slowed down orders during the pandemic, also suddenly found themselves in need of more of these components than before, further adding to demand. As a result, there has been a global shortage of semiconductors, and manufacturers are still trying to catch up.
“Chips are everything,” Mirabaud’s media and tech analyst Neil Campling told The Guardian in March. “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.”
The constraints caused by the pandemic were in no small part exacerbated by the fact that there are relatively few companies making chips, causing major bottlenecks. Taiwan Semiconductor Manufacturing Company (TSMC) is the market leader and crucial across the supply chain, with Samsung in second. If they slow down, everything slows down.
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