The COVID-19 outbreak affected the silicon industry leading to a global chip shortage. Further, causing severe loss in the automotive and smartphone manufacturing sectors. Many manufacturers had shut down their businesses due to the chip crisis.
Computer makers are getting high demand for new chips for remote workers. Manufacturers, like HP and Dell, planned to release PCs with advanced chips, but this got delayed by the global chip shortage. Besides, the gaming industry, Sony reported that they are unable to restock PlayStation 5.
The developers are expected to release the PS6 at the end of 2026. If this crisis doesn’t end within a year or two, this might take time. PC players who need to update their graphics cards must use the old video cards until the semiconductor industry increases the supply.
What are the Reasons behind the Global Chip Crisis?
Glenn O’Donnell, a technology development leader, stated a few facts about this shortage. According to him, the issue occurs because the demand for chips is higher than supply. Thus, manufacturers need to make more chips to cope with this situation. Contact Smart Data Recovery if you need to restore data on a computer chip.
Besides, there are a few more reasons that cause this crisis. The automakers reduced the hardware orders at the start of the pandemic. Because they thought that consumers might not buy new cars during the COVID-19 crisis.
But, it turned out that this assumption was completely wrong. More than 74 million new cars were sold in 2020, which led to increased prices.
There was also a rising demand for new PCs and laptops in 2020. At that time, 80% of companies ran with half of their employees. And, the others consider buying the latest PCs/laptops to continue their office work.
Chipmakers were forced to produce more chips for PCs, game consoles and other gadgets. But, they failed to do that because production slowed down amid the COVID lockdowns.
How long is the Global Chip Crisis Going to Last?
The global chip sale will increase 8.8% from 2020. But, the chip shortage might continue throughout this year. Researchers expect that the industries might face this crisis in 2023.
Intel, TSMC and Samsung introduced new chip fabs to boost the supplies. But, the consumers are unable to purchase those for a high price.
Moreover, Intel started the construction of two Arizona chip factories in 2020, and it might take another four years to be fully operational. Dominic Greensmith, Intel’s director, claimed this new facility would increase sales.
Further, the semiconductor industry will witness rapid growth in 2024. But, until then, you have to find new ways to overcome this crisis period.
How did the COVID-19 Pandemic affect the Chip Industry?
The global pandemic disrupted the supply chains, which reduced production. Intel’s CEO said that they invested $7.1 billion in manufacturing chips. But, the demand increased to 20% in 2020 which creates a huge gap in the semiconductor supply.
Besides, the U.S. and China wars played a major role in the global chip shortage. SMIC, the largest semiconductor maker in Asia, could also not supply small chips. Huawei and other manufacturers also faced the same problem for the COVID-19 outbreak.
Despite having a large workforce, NVIDIA also fails to handle the situations. The global chip shortage affected the development of their new products. And, they struggled to keep up the gamer’s demand even more in this pandemic.
But Huang, NVIDIA’s CEO, expects production to increase in 2023. He believes the pandemic will drive more people to buy computers and gaming hardware.
Why are the Chipmakers taking time to Resolve the Crisis?
The USICA added $52 billion in funding to increase chip production. It also includes $190 billion to improve American semiconductor companies. It would boost chip production and help manufacturers to beat the competition. But, the Republican members are trying to block this bill. This is why US-based companies are struggling with the issue.
Joe Biden also stopped chip production in China after the US-China conflict. And, this might not be the right thing to do when the world is facing a chip shortage. Jan-Phillip Gehreman said the auto industry lacks proper planning to fix this crisis. The automakers used to manufacture a vehicle from 4-8 weeks. But, due to the chip shortage, it takes 12-24 weeks to complete that.
What are the Ways to Fix the Global Chip Shortage?
The chip manufacturer companies are taking drastic steps to mitigate the shortage. Many began to stockpile the chips to manage the consumer’s demand. Investing in new technologies might be a viable solution. More than 50% of suppliers in China limited their exports to reduce the market volatility. Besides, the companies should invest more in the global chip market.
Several US-based companies are making chips from a silicon wafer. And, it can be expected that this innovation will increase the sales up to 50%. The manufacturers are designing new devices with older chips to overcome the problem. Furthermore, the Government is also working to bridge the gap of the supply chains.
Joe Biden deployed economic and national security experts to resolve the chip crisis. TSMC invested $100m to increase semiconductor production. Additionally, Samsung and SK Hynix also made $451bn of investment in the chip market. The European Union states have agreed to grow more chip building to increase the supply.
TI is planning to invest $30 billion in Texas’s manufacturing site. Many chipmakers have moved to the U.S to alleviate the booming demand. Start using advanced technologies to make more chips in a short time. But, without a long-term strategy, resolving this issue might be challenging. So, build a new approach to keep up with the chip demands.
Is the Manufacturers Planning to Introduce New Chips to Fix the Supply Chain?
O’Donnell claimed that corporate suppliers are changing their business mechanisms. Manufacturers might add new features to the Playstation 4 or Xbox One. Thus, don’t stress about not being able to buy the latest PlayStation 5 or Xbox X series. Besides, you can still play intensive multiplayer games on NVIDIA’s RTX 20 cards.
Did the NVIDIA RTX 30 GPU stop working? Switch to the previous model to enjoy interrupting gaming. Moreover, the chip shortage might bring changes in the latest consoles. Currently, the PS5 and the Xbox X are envisioned to be the best consoles. But, the advanced chips might make the upcoming consoles faster than these. And, these devices might support 120 FPS and 4K game streaming in future.
Gamers might stream games on cloud platforms by 2026. But, the manufacturers need to develop new networking hardware for that. Besides, cloud-based gaming sites need servers, ultra-thin chips, and high-resolution displays. The manufacturers might boost the chip supply by then. And, if they fail to do so, the world might witness another crisis within a few years. #KhabarLive #hydnews
