Why is there a Global Chip Shortage?

Why is there a Global Chip Shortage?

You may have noticed over the past few months that it has been difficult to get your hands on the newest computer hardware and gaming consoles. This is due to a shortage of Semiconductor ‘Chips’ that are used in computing hardware.  

What Are Semiconductor Chips? 

Semiconductors power the modern world, from laptops to phones, cars to washing machines, even our refrigerators. Ironically, semiconductor chips also power the factories that manufacture semiconductor chips. Semiconductors, often referred to as Microchips, are the brains of any electrical device. Tiny chips that hold billions of transistors that are capable of instructing billions of devices.  

What Has Caused the Global Chip Shortage? 

There are many factors that could have led to the global chip shortage. Many people online blame the lack of computer hardware such as graphics cards on the rise of cryptocurrency and crypto mining/farming. Some of these crypto farms use thousands of different pieces of hardware to try ‘mine’ for cryptocurrencies such as bitcoin. 

In reality, the shortage is mainly due to the unpredictability of COVID-19. Businesses/manufacturers have to pre-order their semiconductor chips months in advance, to do this they look at trends in the market and forecasted sales over the next year in order to supply their demand, one thing they could not predict was a global pandemic. As working from home mandates were set around the world, many businesses realised they were not prepared, new hardware and devices would have to be sent to employee's homes so business could continue. Demand skyrocketed overnight and we are still seeing a ripple effect nearly 2 years on. 

When will the shortage be resolved?

It’s hard to predict when the shortage will be resolved but experts are saying we will be having the same issues in 2022. Intel stated “We’re in the worst of it now, every quarter next year we’ll get incrementally better, but they’re not going to have supply-demand balance until 2023.”