Everything about Global Chip Shortage: What does it mean to you?
Assuming that you are not living under the cave, you must have heard about the global chip shortage in recent times. ‘
Global chip shortage is a hot topic all around the globe, with experts having their own opinion and ideas on it. However, if you don’t have a clue of what that means or are unaware of such a crisis, you might not catch up with the latest trends.
Don’t worry; we are here to give you a brief idea of chip shortage, what it actually is and what that means to you as well as how it can affect your daily lifestyle. We have all your questions answered by experts.More on this article below. Read on!
What is the Global Chip Shortage?
With all the media houses and news channels discussing the global chip shortage, we may have a brief idea about what that means. So, what does that actually refers to?
Global chip shortage is a term that refers to the ongoing global crisis of chips as well as semiconductors in almost all the major countries from 2022 till the present times. It is a crisis where the demand for semiconductor chips (most of the time also referred to as integrated circuits) exceeds the total supply.
Which has a negative impact on more or less than 169 industries in total. Yes, you got that right! More than 169 sectors are badly impacted by the current ongoing chip shortage. This led to an increase in prices accompanied by a shortage of various commodities.
Let us get deeper into the topic for better understanding.
What is a Chip, and where is it used?
In order to have a better understanding of the current chip crisis, it is important to know the background and details.
Chips (of course, not the ones you eat) are one of the most important inventions of all time. There is no second thought about that. A chip is basically a monolithic integrated circuit or just an integrated circuit that is a set of multiple e-circuits or electronic circuits on a single flat piece of semiconductor such as silicon.
In other words, they are the brains of any gadget storing small sets of data.
Nearly all the devices, gadgets, and different types of electronic products make use of semiconductor chips instead of discrete transistors.
The integrated circuit is a breakthrough technology that has revolutionized the world of technology. As with the question where they are used, the short and simple answer is…everywhere!
From mobile phones to laptops, computers, tablets, servers, external storage disk, Refrigerators, Smart TVs, Air-conditioning, and almost all the electronic product has a small-sized chip to support basic functions.
What Caused the Global Chip Shortage?
The common cause of the global chip shortage is still unclear. However, there are many speculations as to why the global chip shortage occurred in the first place. It can be said that the semiconductor crisis is due to the different world events, COVID-19 being the primary reason.
- COVID – 19
With lockdown announced all around the world, people started using electronic devices for entertainment and work purposes. Online classes, e-learning, and work from home caused a snowball effect, and eventually, the demand for chips increased due to consumer electronics. In fact, the computer says skyrocketed in late 2020 by 27 percent, which led to an increase in demand.
- US-China Trade War
As a part of an economic tussle between the two economic giants, i.e., China and the United States of America, the US Department of Commerce restricted China’s largest and number one chip manufacturer SMIC (Semiconductor Manufacturing International Corporation). Eventually, it made it even hard for SMIC to sell chips to American multinational companies manufacturing electronic products.
- Surge in demand for EVs
Unlike conventional diesel or petrol-powered vehicles, electric cars use a semiconductor to support the operations of the car in many ways. With subsidies, an increase in the gasoline prices, and government promotion the EVs, the demand for these vehicles made new records. This also resulted in increasing demand for semiconductors since all-electric cars include the chip.
What does it mean to you?
Well, believe me or not but the ongoing worldwide shortage of chips has a huge impact on society. And you are not the only one affected by this crisis.
Are you planning to buy a new mobile phone, it is a new smart TV or a smart Air conditioner? Perhaps you are looking forward to buying a new gaming console or an expensive car. If any of them is on your bucket list, you might end up paying more than you’re supposed to before the semiconductor crisis.
This further led to a shortage of phones and other electronic products running on chips. Anyone who knows the fundamentals of economics can predict the rising price of electronics due to limited supply and increasing demand.
You can accept a shortage of phones, watches, and gaming gears; you name it!