The Chip Shortage Isn’t Going Anywhere

The chip shortage started with the pandemic. Now, setbacks at factories and supply chain shortages mean that even when there is supply, delivery will be slow.

The coronavirus pandemic changed the way the entire globe functions. It forced us into our homes, the vast majority of the world on lockdown. We still tried to keep our lives going by working remotely, telehealth, virtual education, virtual events and anything else we could come up with to retain some semblance of normalcy. In our efforts to do this, our use of electronics and electronic devices increased substantially. All of those devices use computer chips, along with a multitude of other items we use every day. But when we were sent home, chip makers sent their employees home too. And now we have a chip shortage, which doesn’t look to be going anywhere anytime soon.

Semiconductor chips are used in many ways. Automobiles. Planes. Boats. Computers. Phones. Toys. Any Wi-Fi enabled device. Almost everything we touch and use on a daily basis has a chip in it. It’s not something we think about, but there it is. We’ve had a chip shortage for a while, and many thought that with the world reopening, we would see some relief soon. However, that does not seem to be the case, and there are a few factors adding to the problem.

The primary factor contributing to the chip shortage is clearly the pandemic, if people can’t go to work and do their job, then there’s no product to deliver. A secondary factor is also a subsequent result of the pandemic, which is supply chain issues. There’s a shortage of truck drivers in the US, and likely worldwide, so even when there is some supply, it can take extra time to get delivered. If you’ve ordered anything online in the last two months, you have seen this first-hand. 

Two additional problems contributing are the fire at a semiconductor chip manufacturing location in Japan, and the recent lockdown of Malaysia. Both of those are setbacks, as well as gas contamination at a factory that makes Apple processors. That last one is said to have been addressed quickly and should not impact production, but that remains to be seen.

Some experts are saying that we’ll see an uptick in chip accessibility in the final quarter of the year, while others say this shortage will last through 2022. Automakers are sitting on thousands of cars that can’t be sold because they don’t have chips. Some automakers have had to make cutbacks due to the shortage. It’s something that many are intrigued by yet no one can predict. Especially because we have the supply chain issue around shipment of these chips, even when factories begin making a dent in the shortage, there’s no telling how long it will take to get those chips distributed.

Let’s also remember that there is a shortage of other parts and supplies across the globe. Manufacturers, even automakers, are struggling to get plastic, steel and other parts as well as chips. So even once chip manufacturers get this under control, companies have to have the rest of their parts in order to complete their products. 

One thing is certain, the chip shortage likely isn’t going anywhere anytime soon. Those who are banking on a change by the fourth quarter are going to be sorely disappointed because, even if everything goes 100% smoothly, we’re so far behind that it’s unlikely to happen. We discussed a while back that Intel CEO Pat Gelsinger believes the shortage will last at least through 2022, and if we have setbacks along the way, it’s going to take even longer. It’s pretty safe to say that there will be more setbacks, too, as we see the Delta variant spreading like wildfire across the globe and there are even other new variants that haven’t reached newsworthy status yet. 

With all of the issues around semiconductor chips and getting parts and the supply chain problems, it’s really important for businesses to take good care of the equipment they have. Machines need to be maintained, kept up-to-date and in good physical condition. Vehicles should be well cared for, maintained and strictly used for business purposes. If you think your business won’t be affected by the chip shortage, you’re wrong. It’s already affecting industries on a global scale, so don’t get caught by surprise. Make sure your business doesn’t lose a step because of an outside problem you have no control over. Call your experts and make sure everything is in top-notch working order before you need to replace something and can’t get it in a timely fashion.

About the Author

Pieter VanIperen, Managing Partner of PWV Consultants, leads a boutique group of industry leaders and influencers from the digital tech, security and design industries that acts as trusted technical partners for many Fortune 500 companies, high-visibility startups, universities, defense agencies, and NGOs. He is a 20-year software engineering veteran, who founded or co-founder several companies. He acts as a trusted advisor and mentor to numerous early stage startups, and has held the titles of software and software security executive, consultant and professor. His expert consulting and advisory work spans several industries in finance, media, medical tech, and defense contracting. Has also authored the highly influential precursor HAZL (jADE) programming language.

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