Global Chip Shortage: Long-lasting Side Effect of the Covid-19 Pandemic

Why is there a chip shortage?

The impact of Covid-19 continues to affect the economy world-wide. After last year’s record demands for devices such as computers, web-cams, headphones, and more to facilitate working from home, the global semiconductor industry is still trying to recover.

Numerous objects, including your cell phone, T.V., and even your car, each contain multiple computer chips. Many of your household appliances, such as a thermostat, microwave, and remote control contain chips too. As a rule of thumb, anything with a display, more than two buttons, or connection to the internet, likely has a computer chip in it.

What are Semiconductors?

Semiconductors have “specific electrical properties,” and are essential to produce things such as electronics. They have paved the way for technology efficiency due to the innovations to make them smaller, and in turn, make our technical devices smaller (and smarter!). Without getting too technical, computer chips -semiconductors, chips – whatever you want to call them; make “dumb things smart”.

How are Semiconductors made?

Chips are produced in highly controlled environments in order to prevent contaminants, such as dirt, dust, or debris from ruining these tiny machines. During the pandemic, many of the semiconductor fabrication plants, or “fabs,” had to halt production and shutdown during a time devices were in high demand. Shutdowns of these labs, coupled with congested shipping, and other factors, has caused a global chip shortage, while the global economy is trying to recover.

Semiconductor Manufacturing Across America

Source: Semiconductors Industry Association

Impact of Semiconductor Shortage

The shortage has caused stock for certain items to remain low, or completely empty. For example, one highly sought after product, the PS5. Sony released the PS5 during the pandemic, and has struggled to meet the demand due to the chip shortage in the supply chain as well as production plants being shut down from Covid-19 concerns. Low stock and high demand for items like these have caused prices to rise and consumers to be on the losing end. Sony has stated they believe consumers will start seeing the PS5 in stock more often by the second half of 2021.

Many industry analysts have different estimates on when the chip shortage will be resolved. Some expect the shortage to ease later this year, and others say the effect will last through next year.

So how does this really effect us as consumers? To put it simply, it may be more difficult to find specific devices or cars in stock. The only solution for now is patience and letting the industry recover from Covid-19.