They’re everywhere – in our cars, laptops, tablets, and smartphones. They help us perform medical diagnostics, do our jobs remotely, and travel by plane. Semiconductors are “the brains of modern electronics,” according to the Semiconductor Industry Association.
Also known as integrated circuits or microchips, semiconductors have facilitated significant technological advancement in the past 50 years, allowing electronic devices to become tinier and faster. However, all devices that rely on semiconductor chips have recently hit a stumbling block: Those vital components are in short supply.
You’ve probably noticed headlines about the global chip shortage. If you’re wondering what’s going on and what it means for your business, the following information should shed some light on the situation.
1. Why is there a global chip shortage?
- Some tech companies stockpiled chips and ordered them in advance at the start of the pandemic.
- The abrupt shift to remote work led to greater demand for webcams, tablets, laptops, and other items that rely on semiconductors to function.
- Many schools switched to virtual learning and also needed equipment like laptops and tablets to facilitate remote education.
- Due to a lack of 200mm fabrication equipment, manufacturers have had issues satisfying the growing demand for lower-cost computer chips constructed with 200mm wafers.
- Lockdowns and disasters such as fires and winter storms have disrupted operations at semiconductor factories.
- During the pandemic, people quarantined in their homes have bought more home entertainment products such as TVs and gaming consoles.
2. When will the computer chip shortage end?
In a nutshell, it will be over when supply catches up with demand. Computer chip manufacturers are working on expanding capacity to remedy the deficit. Still, it takes time and money (typically billions) to create new factories, Koray Kose, a senior director analyst with Gartner’s Supply Chain Sourcing and Procurement team, told the BBC. Kose predicts we’ll probably still be dealing with the shortage roughly a year from now (November 2022).
Overall, it’s not certain how long the semiconductor shortfall will last, but experts seem to agree it won’t end any time soon. For instance, Jean-Marc Chery, CEO of STMicroelectronics, has said the situation likely won’t come to an end before the first half of 2023, according to Reuters. Similarly, CNN reported that Intel CEO Patrick Gelsinger has predicted the shortage could drag on until mid-2023.
3. What does the semiconductor chip shortage mean for businesses?
The mismatch between supply and demand for computer chips is driving up prices for devices that need semiconductors, David Yoffie of Harvard Business School told Popular Science.
The shortage has also led to delayed shipping. At Stratosphere Networks, we’ve experienced long lead times (frequently 60 to 90 days) for various devices, including switches and laptops. So, if you think you’ll need to replace any hardware or plan on hiring new staff members soon, you should place your orders now to ensure you have the necessary equipment on time.
If you have any questions about ordering equipment for your organization, don’t hesitate to reach out to our team by calling 877-599-3999 or emailing firstname.lastname@example.org. Our technology advisors would be happy to assist you with all of your IT needs.