Computer chips are at the heart of all the digital products surrounding us. During the previous year, gamers struggled to buy new graphic cards whereas Apple had an issue staggering the release of iPhones. Moreover, the latest model of Xbox and PlayStation consoles were also affected. Samsung too has been a victim as it is unable to fulfill orders for the memory chips.
Apart from these companies, many car industries came to a halt since the unavailability of the chips and microprocessors required for manufacturing. Despite there being a demand for more than 100 microprocessors, the manufacturers were unable to source the chips for all the car industries. One insider calls this the Chipageddon.
Effect of COVID-19 Pandemic
The coronavirus pandemic has erupted many businesses and lives. Meanwhile, the automotive industry saw a big dip thereby cutting down on all its orders. However, in the third quarter of 2020, sales of cars created an upsurge and the demand for consumer electronics continued persistently.
The 5G set-up
The roll-out of the 5G infrastructure has added to the increasing demands. Huawei put in a huge order for building up a stockpile of chips. On the contrary, the car industry maintains a low margin and does not tend to stockpile the chips.
Analyst Richard Windsor put forth, “It takes about 18 to 24 months for a plant to open after they break ground. And even once you’ve built one; you have to tune it and get the yield up, which also takes a bit of time. This isn’t something you can simply switch on and switch off.”
The leading chip producers – TSMC and Samsung are known to have spent billions for attaining a new highly complex 5-nm chip. And many of these chip producers are expected to respond to the extra demand by increasing their prices.
