Chip Shortages

Many shortages of chips and minerals have been happening since the start of the pandemic. This affects many companies that rely on electronic chips for their products, such as pharmaceuticals, 5G, and batteries. Just as this issue was finally being resolved, new variants of Covid-19 have been reversing the process. 

 

    The scarcity of these semiconductors has been causing some disputes between China and the United States. A report, “Tech, Media, and Telecoms Predictions 2022,” estimated that things would slowly die down between them during the latter half of 2022. Daniel Clarke, an analyst from the Thematic Research Team at GlobalData, also stated that consumers could anticipate automotive and tech industries to suffer from this the most. New car sales will be much lower than they would like for automakers because of production issues. For tech companies, it’s similar; gaming consoles and smartphones will face a lack of availability, or the prices will simply increase because tech companies can either pass the costs to the consumers or choose to pay for the costs themselves. Last year, Apple was forced to cut about 10% of the iPhone 13’s production due to shortages. Fortunately, tech companies face less pressure this year. 

 

    New variants of Covid-19 could further worsen the pressure of the situation by leading to more lockdowns. However, these hypothetical lockdowns won’t be nearly as disruptive because most consumers already bought electronics during the previous lockdowns. GlobalData’s study stated that supply chain issues would remain, but they won’t be as bad as last year. Deloitte’s November report speaks of an even worse outcome that could potentially happen; consumers waiting for 10 to 20 weeks for chips by the end of 2022.

 

    Daniel Clarke from the Thematic Research Team at GlobalData concluded that the best course of action surrounding the chip shortages is to invest in better chip manufacturing, preferably from western governments. The investment would be to search out, mine, and process the minerals that are critical to the chip manufacturing process.