The global chip shortage, or the semiconductor shortage, has spread worldwide. This latest chip shortage began in 2020 as the demand for chips exceeded the supply. Let’s explore what exactly it is and how long it’s expected to last.
The Global Chip Shortage: What Is It?
This shortage directly affects the semiconductor industry and every industry that relies on it. These chips are critical for businesses, as they order in bulk and are used in every electronic device they sell.
Since the disruption of these chips is huge, consumers have been experiencing a shortage of almost all products since 2020. This shortage has become a noteworthy driver of global price increase on nearly every consumer good.
What Contributed Toward The Global Chip Shortage?
The Covid-19 pandemic was the driving factor in the global chip shortage. This resulted in two main trends:
- Almost 13% increase in global demands for laptops and PCs due to the remote work & remote support situation.
- Disruption in the supply chain industry due to labor shortage.
Other factors include the rise of cryptocurrency and droughts in Taiwan. The cryptocurrency increased the demand for chips because of the data and crypto mining trend that started. In contrast, Taiwan is one of the major producers of chips. The droughts adversely affected the production of ultrapure water required to clean the chip-making factories and silicon wafers (which fabricate silicon chips in volume).
When Will This Shortage End?
Intel, AMD, and many other industry leaders have predicted that this global chip shortage will last till the end of 2023.
Pat Gelsinger, Intel’s CEO, stated that the chips’ demand rose by 20% yearly since 2020, and the affected supply chains further created a considerable gap. According to him, this shortage will last for a few more years.
The co-founder and CRO of Dell, Michael Dell, also agrees to this shortage lasting a few more years. However, the decline of the crypto market has resulted in the decline of Ethereum mining. Because of this, graphics card and CPU stock have slowly recovered from the shortage. But due to new tech launching every year, it’s impossible to state an exact date of chip shortage recovery.