Computer Chip Shortages is Striking Hard On Central Pennsylvania Businesses
In almost every smart or pre-programmed electronic device made today, there is one component that they all share. It’s not the power cord or the LCD screen, it’s a semiconductor computer chip. If a device can store data, compute controls, or make even one decision for itself, a semiconductor chip is needed to do the computing. However, in an unexpected turn of post-pandemic market events, there is a global shortage of these essential little silicon chips. The average rice cooker takes two or three chips. The average car takes between 50 and 150 semiconductor chips. Smartphones take more, but don’t publish their numbers.
This shortage of semiconductor chips has already hit the auto industry hard, with many factories forced to slow their production schedules from lack of chips to install in the car. At the same time, the smartphone industries seemed to be doing fine in the shortage, but as we’ll soon find out, even their stockpiles of essential pieces won’t last forever. A sustained shortage of semiconductors can wreak havoc on our current market, here in Central Pennsylvania and across the globe. Right now, we are looking at production slow-downs and, soon, shortages in many electronic products as chips become scarce.
The Impact on the Tech Sector
Initially, the shortage did not seem to impact mobile device companies as strongly as other manufacturing industries like the automobile market. Phone manufacturers stockpiled the specialty chips they required to build their devices, but those stockpiles are waning. The artificial ability to meet increased demand for remote-ready tech will soon slip and we should expect a few market changes in that time. Scarcity in an essential production component will slowly but surely mean scarcity in the resulting products.
Expect Production Slowdowns from Major and Minor Brands
Apple is expecting revenue lost this year due to part shortages to be around $3 B and is planning to limit their chip-based losses to iPads alone. Microsoft reported a drop in their computer hardware revenue and production of the latest Xbox models has slowed significantly. Auto industries are already slowing production rates due to the chip shortage and inability to complete vehicles. Smaller brands may also lose out in competition with tech giants for chip orders, while tech giants make their own plans to go vertical.
Where Did the Semiconductor Shortage Come From?
The Non-Infinite Market of Semiconductors
The semiconductor shortage is one of those market SNAFUs you only see when a global crisis hits a global economy. Semiconductors take months to produce and only a few factories (less than 600 worldwide) produce the chips needed. Each factory only produces a slice of the full range of chip types and sizes needed by each industry for individual functions like control boards, sensors, and CPU processors.
The Pandemic Order Slow-Down
So when the pandemic hit, the market dropped. People stayed home and they stopped buying making big purchases like vehicles and smartphones for a while. This caused a surprising dip in the demand for semiconductor chips. The chip manufacturing plants slowed their roll with (almost) everyone expecting a slow year or two of market recovery and lowered production.
The New-Normal Recovery Wave (Hit Too Soon)
Then the recovery hit and suddenly people were adapting to the at-home situation, being transitioned to remote work, and buying things again. Smartphones and other devices useful for working at home recovered first and massively increased their orders for semiconductor chips. Then automobile sales came back and so did their demand for chips. But now, the factories are under-producing and to make matters worse, one of the three auto-dedicated chip factories caught fire back in May 2021.
The Critical Catch-Up
This leads us to today. Semiconductor factories have under-produced and are part of a multi-industry mistaken thought that demand recovery would be slow. Now, buying demand is up as people work from home and embrace their post-pandemic lifestyles, but chip production is down and won’t catch back up for several years due to orders bouncing up and down in the past two years.
How the Computer Chip Shortage is Impacting Central Pennsylvania Businesses
This global shortage of an essential electronic component is hitting local industries hard as well, not just the tech giants and car companies. Here in Central Pennsylvania, our manufacturers will also see a shortage or slow-down in the availability of semiconductor chips for smart electronic devices. We can also expect shortages of products that are made with semiconductor chips, as their manufacturers may also be affected by the chip order squeeze.
Manufacturing is Hit Hard by Chip Shortages
If Apple is low on stockpiled chips and is slowing production, it’s no surprise that local businesses may need to do the same. Central Pennsylvania businesses that make their own tech or smart products are seeing a dearth of available chips on the market and a shortage from their usual suppliers to complete computerized products. From smart fans to smart phones, production is slowing and local producers are being hit hard by the shortage.
Computerized Devices See Slow Production, Soon to be Shortages
Local retailers and service providers who stock computerized devices may also see a slow-down in availability. Retailers may find that their supply of high-tech inventory will dwindle in the next two years until the market begins to recover and the shortage is corrected. Services in need of new equipment may find that models made after 2020 are difficult to come by. Both should make alternate plans and perhaps stock older models until the shortage passes.
Making the Most of Your Current Devices
Offices and other workplaces may also find that this year’s iPad replacement wave is less possible than they planned. During a shortage, prices and availability go up. It may become necessary for many Central Pennsylvania businesses to optimize their current technology instead of upgrading their hardware this year.
Mainstreet IT Solutions in Optimizing Your Tech This Year
This year and next year will not be a great time to buy new tech, but you can make better use of the tech you have. Now is a great time to re-strategize and plan your budget for 2023 when it is predicted the superconductor market will have mostly recovered to meet demand.
If your company is tackling the issue of tech shortages in the coming year, Mainstreet IT Solutions is ready to make this a year of optimization and streamlining your processes with the tech you have right now. From network upgrades to performance-boosting, your devices and systems will run as if you bought them this year with the latest chips. Contact us today to consult on your company’s plan to handle the semiconductor shortage.
