These are some of the headlines that you will find if you google on this topic:
— Waiting for PS5 or Ola S1? Blame the global chip shortage for longer wait times
— Global chip crisis hits automakers hard
— Smartphone prices to increase further as global chip shortage crisis continues
— Indian car manufacturers just had their worst festive season in a decade
And the news can go on and on.
So what exactly lead to this crisis?
With most of the equipment that we use becoming smarter, the dependence on chips and processors is at an all-time high. The trend will continue to grow at an exponential rate with a focus on smarter living. Chips or processors power every possible product on the market from high-end cars to washing machines.
Chip-making is not a run the mill business where capacities can be increased over a short period of time. The architecture of the motherboards vary significantly based on the devices that they would power.
One also needs to factor in the level of complexity associated with manufacturing different types of chips – e.g. The automotive chips are of medium-level complexity, compared to the really small and extremely complicated ones on smartphones and personal computers
Add to that – chip makers usually do not enjoy the kinda margins that some of the products that use these chips enjoy.
The current situation does seem to be heading well into 2022 and there seems to be no end to this crisis. The pandemic has just given us a glimpse of how fragile the global supply chain is.