Microchip Shortage: What’s happening and how will it impact on your business?

If you have watched the news recently, it will come as no surprise that the tech industry is under severe pressure from both internal and external factors. 

As technology has advanced, so has the requirement for computer chips to power millions upon millions of our every consumer products such as cars, washing machines, smartphones and much, much more. 

This has led to a higher demand for them but the main problem is that there aren’t just enough of them to go round. This has meant that many of our popular products such as laptops, games consoles, iPhones are hard to source. 

Many consumers have already noticed these problems. For example, used-cars sales have rapidly increased as newer vehicles require thousands of computer chips which are currently hard to get hold of as production has slowed down. 

So, what’s happening? 

The specific chips that are hard to source help to run certain functions within modern products and usually consist of more than one in a single device. 

This scenario has been on the cards for many years not just as a result of the COVID-19 pandemic. 

Koray Kose, an analyst at research firm, Gartner reveals that many of the strains on the supply chain for the chip industry were already there before the pandemic even came about. This was largely due to the rapid rise of 5G which drove up demand as well as the US’s decision to stop the sale of semiconductors and other forms of technology to Huawei. As you can imagine, this decision led to multiple chip makers from outside the US firing in orders from the Chinese firm. 

However, it is important to note that this isn’t the only manufacturing problem that has led to the shortage of specific components. 

To provide you with another example, you will find that there are two different ways of producing chips right now: you can do it with a 200mm or 300mm wafer. What this means is that it refers to the diameter of the circular silicon wafer that gets distributed into many tiny chips. 

The only problem is that larger wafers are pricey and only used for more advanced devices. 

With this in mind, many lower cost chips are being required, which are used across even more consumer products which requires more 200mm technology to be sourced with demand becoming unprecedented. 

How will this impact on my business? 

When COVID-19 hit, some tech firms panicked by stockpiling and advancing orders of chips which made it extremely difficult for other companies to source these components.  

This particularly impacted on businesses who had to change their work approach from an office environment to a remote working environment which required their employees to have laptops, tablets and other technology in order to do their day-to-day jobs, worse still, these chip factories shutdown during all the lockdowns. 

Mr Kose, further added that the pandemic wasn’t the only cause of the chip shortage: “That was probably just the last drop in the bucket”. 

Fast forward to this point: the pandemic has made a precarious situation for chip makers worse – currently we’re experiencing a resurgent tech boom, where supply can’t quite meet the demand for it and further still it won't get resolved quickly which could lead to further delays. 

Next Steps? 

If you are a business that is struggling to get setup for remote working or is having problems sourcing hardware or software then please get in touch with our IT team today to discuss how we can help your business get up & running for remote working. 

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