Executive Summary
- A global shortage of semiconductor chips – a critical component in many consumer and business tech products – has been impacting supply since early 2020.
- Caused primarily by the COVID-19 pandemic, among other reasons, this shortage of chips has led to shortages of computer hardware, games consoles, vacuum cleaners, and even cars.
- In this article, we’ll explain the history of the global chip shortage, and how it might affect UK businesses going forward. We’ll also ask the question: when will the global chip shortage end?
Introduction
It may sound like a tragedy for British cuisine, but don’t worry: the global chip shortage has nothing to do with chippies – and everything to do with modern electronics.
As far as UK businesses are concerned, the ongoing shortage of computer chips means that the cost of operations, upgrades, and other changes to IT infrastructure could rise.
With that in mind, in this article, we’re going to take a closer look at the global computer chip shortage of 2021, what’s causing it, when it might be resolved, and how UK businesses can weather the storm.
What is the global chip shortage?
The ongoing global chip shortage, which began in mid-2020, is a situation in which the demand for semiconductor chips, also known as integrated circuits, is exceeding the available global supply of these chips.
The shortage of these semiconductor chips has apparently impacted 169 industries already, including both automotive and consumer technology, and has led directly to certain products being entirely unavailable for long stretches of time. This includes new – and highly sought-after – products such as Sony’s new PlayStation 5 games console.
While the shortage means consumers can’t easily purchase these technology products, one knock-on effect has been price-gouging and scalping, causing products to sell for highly inflated prices on sites like eBay and Amazon Marketplace.
Why is the global chip shortage happening?
It may surprise you to learn that, while the main culprit should be immediately obvious, there is actually more than one reason for the global chip shortage:
- The global COVID-19 pandemic is the primary factor for the chip shortage. Just as businesses in the UK shut down or adapted during the lockdowns of 2020 and 2021, manufacturers in China did the same thing. On top of that, everybody working and staying at home meant that sheer demand for technology skyrocketed, creating an immediately inflated demand for consumer electronics. Additionally, the silicon used in the chips was actually briefly repurposed for the creation of vaccine vials.
- Cryptocurrency mining, which is a topic we’ve covered here on the Get Support blog before, continued to gain steam during the pandemic, meaning demand for graphics cards also skyrocketed.
- The Taiwanese drought led to problems manufacturing chips because the process requires the use of purified water. The lack of rainfall meant that water was at a premium, impacting how quickly chips could be manufactured.
How will chip shortages affect UK businesses?
The good news for UK businesses is that, broadly speaking, the global chip shortage affects consumer goods, rather than business goods. The main affected products are games consoles, cars, and high-end computer graphics cards.
The most likely area that businesses in the UK will feel the pinch is when refreshing their IT hardware.
If you’re working through your IT strategy roadmap and it’s time to replace old computer hardware with new, it could be that you’ll need to wait just a little longer. This does depend, however, on the particular computer specifications you’re looking for, because the chip shortage primarily affects more high-end (and thus expensive) components, like graphics cards. Most business-use computers won’t be equipped with discreet graphics cards, and instead have integrated CPUs, which may mean you avoid the sting of the chip shortage.
If you’re not sure whether the hardware you’re using (or planning to use) will be impacted by the shortage, be sure to ask a member of the Get Support team for the most up-to-date expert advice.
When will the 2021 chip shortage end?
Of course, the truth is that it’s impossible to predict exactly when the chip shortage will end. That said, there have been some green shoots of hope appearing lately which could herald the end of this period of technological drought.
According to reporting from the South China Morning Post, the chip manufacturers in China are now ramping up production. Thanks to improvements in the pandemic situation and the other factors mentioned above, production of integrated circuits reportedly shot up by over 40% year-on-year in July 2021.
It may, then, simply be a matter of time until our cars, games consoles, and computer parts are finally back in stock.
Get ahead of global technology changes with IT support from the experts
Unless you have a fully functional crystal ball, it’s natural that some global events will take us by surprise. But business has always been full of surprises, and the real solution lies in how companies react to them.
That’s why, at Get Support, we offer comprehensive IT support agreements which include 5-year long-term IT support budgeting for hardware and software. This way, you can predict what’s coming down the road and be agile should anything change.
Want to know more about our IT support packages or discover how we could help your company specifically? Call the Get Support IT experts now on 01865 59 4000, or just fill in the form below.
