Global Microprocessor Shortage And Why Should You Care?

Currently, we are suffering from a microprocessor shortage globally. This global crisis is causing major delays in the release of products that require microprocessors such as computers, laptops, game consoles, small electrical items, cars, and many more.

What Caused The Microprocessor Shortage?

Many factors contributed to the short supply and high demand for microprocessors. At the start of the pandemic, a lot of the global workforce suddenly found themselves working from home. Many needed computers/laptops therefore a huge demand for computers/laptops and peripherals increased, this meant manufacturers needed to manufacture more microprocessors to build more products to meet demand. Another factor was that the automotive industry cut back on their demand for microprocessors in the expectation that sales will fall during the pandemic. However, their sales rebounded quickly sooner than expected so demand for microprocessors increased. Consequently, we have two huge markets demanding large amounts of processors.

Many microprocessor factories were affected as well. Firstly the emergence of COVID-19 caused production lines to slow down due to social distancing and adaptations to the pandemic. Samsung’s Semiconductor manufacturing operations in Texas was halted for a month due to a power outage. Taiwan suffered drought which threatened major semiconductor operations in the country. The US-China trade war affected the export of microprocessors into the United States from China which is known to be a major semiconductor manufacturer. The majority of semiconductors are manufactured by Samsung and TSMC, which have plants around the world however these are in short supply as well.

Expanding current manufacturing operations could take months to start running and would take months for the extra capacity to be felt. Building new manufacturing plants from the ground up will take years and would cost billions.

What Is Being Done About It?

U.S President Joe Biden has acquired $37 billion in funding to bring chip manufacturing to the United States. Four new factories are being slated to be constructed in the U.S, two Intel and one TSMC factor in Arizona and another Samsung factory in Texas. China is also offering subsidies to the chip industry to reduce dependence on Western Technology. Many measures are long-term fixes and will benefit industries soon.

How Will It Affect Me?

The global microprocessor shortage will mean you will see delays in new product releases or low stocks of products in stores such as the PlayStation 5.  The manufacturing of existing products will adversely be affected as well. You will also see higher prices in products/components such as graphic cards.

When Will The Microprocessor Shortage End?

Many companies are hoping that the supply and demand will rebalance itself by the end of 2021. Apple supplier Foxconn warns that the shortage could last until 2022 which could delay the rollout of 5G globally. There are long-term solutions that are being put in place however these benefits won’t be felt straight away. Once the restrictions from the pandemic end and the demand slowly decreases; supply will slowly catch up to demand and manufacturers will be able to predict more accurately in a stable climate.