GLOBAL CHIP CRISIS: A global crisis of microchips has caused a significant undesired impact on daily lives

  • The world recently witnessed a technological block such that manufacturing processes for various electronics ranging from cars to computers came to a halt
  • Microchips are one of the smallest components of electronics, the shortage of supply of which in the post-pandemic world, resulted in a global crises
  • Different opinions exist on when the shortage will be resolved. Meanwhile, prices of electronics keep getting hiked causing distress to the common man.

There are chips in almost everything we own. In today’s world, these electronic products range from gaming consoles and washing machines to cars and more. These devices rely on computer chips which are also called semiconductors. But these small accessories which literally power such varied aspects of our lives are now in critically short supply.

What are these chips?

These micro-chips or semiconductors are the equivalents of a brain in our electronic devices. Chips are primarily a set of integrated electronic circuits on a semiconductor material (which is usually silicon). They have billions of transistors within them that control the passage of electrons (acting as a gate for these electrons).
These chips are the tool that enabled us to handle machines faster and work more efficiently. There are more than 100 million chips in daily use and a shortage of these could put brakes on the wheels of this fast-moving modern world.

How did this chip shortage suddenly occur?

The main culprit behind this shortage like in many other cases is none other than the Covid-19 pandemic. The pandemic shut down the factories which led to the drying up of the supplies needed for chip manufacturing. Though the supply stopped, the demand kept increasing. Orders began to pile up as the manufacturers struggled. Although production is back to normal now the backlog which has grown to a huge extent, quite naturally gave birth to a global chip shortage crisis. This event has been coined as “Chipageddon”.

Effect on industries and our daily lives

Companies like Toyota, Samsung and Ford had to temporarily halt their production. From the smallest alarm clocks to big cars, production came to a standstill. One of the biggest smartphone companies Apple felt the pinch too as it had to temporarily slow its production of iPhones.

The aftermath of this situation was even felt by companies that aren’t normally associated with computer chips. Sony has said that it won’t be able to hit its target sales of PS5 owing to this shortage. Samsung is a company that sells almost $56 billion worth of semiconductors and even they are not spared in this scenario. An obvious after effect of this was the rising prices of their commodities.

When will this shortage issue be resolved?

Opinions vary when it comes to this question. Analysts say that the issue will easily drag into 2022 without being resolved. Patrick Gelsinger, the CEO of Intel however believes that this chip shortage might be dragged on for at least a couple of more years. He also adds that prices may drop after that. Asian based chipmakers like those in Taiwan and China are racing to meet the demands but it is unlikely that they will be able to reverse the current scenario even in the months to come.

Conclusion

What had initially started only as a harmless temporary delay in supply, transformed into a block inflow of technology for companies. This chip shortage not only hampered billion-dollar deals but also took with it the comfort enjoyed by the common man. This is because not only were electronics unavailable at affordable prices but also various Government agencies raised taxes further to cover the loss. Truly, it’s daunting to wonder how indirectly dependent we are on the smallest chip, even invisible to the naked eye, for a comfortable life.

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