Why the global chip shortage won’t end anytime soon

The news of the global chip shortage has been so far-reaching this year, it has become a meme. “I’m sorry I forgot to wash the dishes, there is a worldwide shortage of potato chips.” But as with many online jokes, there is a kernel of truth in that. The semiconductor chip crisis is real, and it has had a serious impact on our lives. Cars are more expensive and harder to build. Computer makers are rushing to keep up with the insatiable consumer demand for remote work and school devices. Countless products have been delayed, with release dates pushed like dominoes throughout 2021 and into the coming years.

Although it is an issue that affects almost everyone, the shortage of chips has been particularly painful for gamers. A year after the launch of the PlayStation 5, it’s still practically impossible to order a device. (At least, not without paying exorbitant codecs, or following machine-like stock bots.) PC players eager to upgrade their GPUs, already accustomed to dwindling hardware supplies and rising prices, will have to live with video. Their old cards a little longer.

As Glenn O’Donnell of Forrester Analytics told Engadget, the problem is often a simple issue of supply and demand. You can point to several reasons for this: Automakers reduced their orders for devices at the start of the pandemic, assuming that consumers wouldn’t be interested in buying new cars. The opposite turned out to be true – massive demand drove up prices for used cars significantly. Chip makers have also been forced to keep up with the growing demand for computers, game consoles and a variety of gadgets while also dealing with slowing production amid COVID shutdowns and other precautions.

Aaron Suburis / Engadget

“I’d say things have improved, but they’ve actually gotten a little worse, and I’m not surprised,” O’Donnell said in a recent interview with Engadget. In April, he argued that the global chip shortage would continue throughout 2022 and into 2023. Now, he’s even more convinced we won’t see any major relief until then. While manufacturing of future chips from Intel, TSMC and Samsung could boost supplies, it will take at least two years from the time these companies get up and running. Intel began building its two chip factories in Arizona in September, and doesn’t expect them to be up and running until 2024.

Basically, you get used to the lack of chips, since we will suffer from it for a while. In an interview with Nikki last week, Intel CEO Pat Gelsinger also confirmed that he expects the situation to continue until 2023. “The coronavirus has disrupted supply chains, making them negative,” he said during a press event in Malaysia, where the company is. It invests $7.1 billion in manufacturing and packaging lines. “Demand is up 20 percent year over year and the disrupted supply chains have created a really big gap…and that massive demand has continued.”

NVIDIA CEO Jensen Huang echoed that sentiment recently Yahoo Finance Interview, saying he doesn’t believe there are “magic bullets” when it comes to dealing with the supply chain. Huang also noted that NVIDIA’s supplier pool is multi-source and diverse, so the shortage should not greatly affect the development of new products. But NVIDIA also struggled to keep up with gamers’ demands even before the pandemic. Usually, brokers and cryptocurrency buys all available stock, leaving ordinary consumers with a limited amount of inventory from stores and sellers.

While Huang expects production to pick up in 2023, he also believes the pandemic-driven drive to buy more PCs and game consoles is here to stay. “I think these are permanent conditions, and we’ll see new computers being built for a long time,” he told Yahoo. “People are building home offices, and you can see all the implications of that.”

In the United States, there is a glimmer of hope that the Innovation and Competition Act (USICA), which includes $52 billion in funding for America’s CHIPs Act, can spur more semiconductor production. But after it was passed in the Senate earlier this year, the legislation stalled in the House of Representatives, with Republican members saying they would veto USICA. The bill also includes $190 billion to improve research and development in US semiconductors, all in the hope of becoming more competitive with China, which has boosted its chip production dramatically over the past decade.

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