Effects of the Global Microchip Shortage
The advancement in technology has spread microchips from just being used in computers and cars into our ordinary daily gadgets. Our electric toothbrushes and tumble dryers now use chips, among so many other products.
Imagine having a problem accessing all the latest live casino games because the gadget you need to use doesn’t have the necessary chip that needs it to work. However, it has been noted that the effect of the shortage of chips is very minimal on the online casino industry. The iGaming industry has remained very flexible despite this shortage. However, with the lack of chips expected to last until mid-2022, there’s no telling what direction this could take.
Effects of the Shortage
One of the effects associated with the shortage is our everyday appliances could be at risk. The production of chips for our washing machines and toothbrushes has been affected. Although, some retailers still have these appliances in stock because they had filled up their warehouses. However, there’s a possibility of a shortage in the next few months.
The auto industry got the biggest hit. It entirely relies on microchips for driver assistance systems to computer management of engines. In companies like Ford, VW, and Jaguar, the effects can be seen because they’ve shut down their factories, laid-off workers, and slashed their production.
This chip shortage has significantly affected most forms of manufacturing, from small businesses to big industries. Most manufacturing machines use microchips to control their functions in the production process. Manufacturing is being delayed or not occurring at all.
Why the Shortage?
- The most straightforward answer to this question is the lack of supply and high demand. The chip shortage is also due to the pandemic shutdowns and geopolitics.
The reason for the high demand is a result of most systems and processes being digitized since 2020. The manufacturing process of microchips involves many complexities that require specialized technology to continue production. The shutdown affected the manufacturing industry just like it did other industries.
Most manufacturing plants are running at maximum capacity, but it’s proven insufficient. Building new factories are expensive and time-consuming and will take time to become operational.
- The vehicle industry has had the most significant increase in demand, with a single modern vehicle needing up to 3,000 microchips for its production.
- The gaming and cryptocurrency industry has shown a significant increase in demand when bots and scalpers buy everything that’s on offer.
- As a result of the pandemic, home and office supplies of electronics have also seen a rise in demand as more people were forced to work remotely.
- Chinese companies control about 10% of the production of microchips. The lockdown and shortage of shipping containers led to fewer deliveries from China.
- In March 2021, a fire broke out in Japan and destroyed machines in a semiconductor plant that produces about a third of the world’s microchips for vehicles.
Solutions to the Shortage
In the United States, the Biden-Harris Administration set up a task force to address supply chain bottlenecks and create incentives to expand manufacturing chips.
In Canada, the Semiconductor’s Council established a council in May 2021 to deal with the microchips issue. Canadians were called to look at the shortage and think more strategically by establishing themselves as leading developer.