Computer chip shortage: What caused it and when it will end

by Milan Stanojevic
Milan Stanojevic
Milan Stanojevic
Windows & Software Expert
Milan has been enthusiastic about technology ever since his childhood days, and this led him to take interest in all PC-related technologies. He's a PC enthusiast and he... read more
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  • The world is going through a computer chip shortage at the moment, and if you’re not familiar with it, this guide will explain everything.
  • The shortage is caused by the pandemic and a sudden and massive demand for consumer electronics around the world.
  • All consumer electronics brands are affected by this, and the shortage is expected to last for at lest until the end of the year.
  • If you want to know more about the processor chip shortage, be sure to keep on reading.
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Computer chips are an essential part of modern electronics, and we can find them in almost every device, ranging from our TVs to smartphones.

Currently, there’s a worldwide computer chip shortage going around, and this can be a major problem for the whole electronics industry.

Today we’re going to take a closer look at the chip shortage and give you all the necessary information that you need to know about it.

What should I know about computer chip shortage?

How did the chip shortage start?

Chip shortage started in 2020 after the start of the pandemic, since the demand for consumer electronics grew, especially with the increasing number of people working from home.

With the increased demand for consumer electronics, the demand for computer chips grew thus causing the shortage.

It all comes down to the supply and demand, and when the demand grew due to the pandemic, the suppliers weren’t ready for it.

Now that we know how the chip shortage started, let’s see what’s causing it.

What is causing the chip shortage?

The car production had to shut down temporarily due to the pandemic, but the demand for cars grew and the car industry started to recover.

By doing so, the demand for chips to be used in car electronics rose. However, the chip manufactures are overwhelmed by making chips to meet the increasing demand for consumer electronics.

Other factors such as a drought in Taiwan, a Renesas Electronic Corporation fire in Japan, and the failure of the Texas power grid are all factors that have contributed to the global chip shortage.

These are some of the main reasons why there’s a chip shortage in 2021. So, we know what is causing the chip shortage, but who is affected by this shortage? Keep on reading to find out.

Who is affected by chip shortage?

Some might think that the chip shortage is affecting only the major companies, but that’s not the case. The companies are experiencing shortages because the demand for electronics skyrocketed.

If the companies can’t produce enough electronics, the customers are going to be affected by this as well. This includes almost every person on the planet, but the effects of the shortage might not be as drastic as some think.

In the worst-case scenario, users won’t be able to get a specific product because the demand exceeds the current supply of consumer electronics.

This is similar to the graphics card shortage that was caused by crypto miners and the PS5 shortage due to scalpers. This means that certain electronics might not be available due to the high demand.

In other cases, the prices of electronics might rise due to the scarcity of electronics. According to market researchers, the prices of large screen TV has increased by around 30% compared to last year.

But it’s not just TVs, the computer chips are in almost every digital device that we use, so the shortage will affect smartphones, consoles, laptops, and other similar markets.

How will this shortage play out in the real-life, and how much will the prices go up we can’t predict, so we’ll just have to wait and see how the situation plays out.

Regarding the companies, the car industry has been affected the most by the chip shortage. According to the experts, it’s expected for the auto industry to make between 1.5 million and 5 million fewer vehicles this year alone.

Many manufacturers such as General Motors, Ford, Volkswagen AG, Subaru Corp, Toyota Motor Corp and Nissan will scale down their production due to the chip shortage.

According to Ford, they are expecting a loss as has as $2.5 billion this year, and the same applies to other car manufactures.

Source: Macrotrends

A regular car uses around 50 to 150 computer chips, and with the shortage of chips, it’s no wonder to see that many car manufactures are scaling down their production.

This is a massive hit for the car industry, and we still can’t predict what will be the global consequences. But it’s not only the car industry that’s affected, the consumer electronics manufactures are affected as well.

Chip shortage affected Qualcomm, and the company is struggling to keep up with the demand. Since Qualcomm is closely connected with Samsung we expect Samsung sales to be affected by this.

Apple has also been affected by the lack of chips, and Apple’s financial officers expect to see up to a $4 billion drop in revenue in this quarter alone.

Source: Macrotrends

As you can see, this is a global problem, and it will affect consumers and every manufacturer of consumer electronics.

We can’t tell what the future holds for the electronics market, and we are still waiting to see what will be the global consequences of the chip shortage of 2021.

Who is the largest chip manufacturer?

The chip manufacturers and companies that are partnered with them are affected the most by computer chip shortages. There are several major chip manufacturers, and in this section, we’re going to list them.

Coming from Silicon Valley, Intel is the largest chip manufacturer in the world. The company has over 100, 000 employees in 46 different countries around the world.

Intel is closely associated with the development of CPUs, so we might see an Intel processor chip shortage in the future.

We have to mention that Intel processors are used by other hardware manufacturers such as Lenovo, HP, and Dell, so you expect devices from these companies to be affected by the shortage.

Samsung is also a major producer of chips, and the company hires around 290,000 people and operates in 74 countries around the world.

All Samsung’s electronics will be affected by the chip shortage, but Samsung’s partners including Apple, Sony, HTC, and Nokia are also affected.

Taiwan Semiconductor Manufacturing Co. (TSMC) is the world’s largest independent chip factory, thus making it one of the largest companies in Taiwan.

The company has over 50,000 employees and it makes over 10 million chips per year. Regarding its partners, TSMC is closely associated with Apple.

SK Hynix was known as Hyundai Electronics in the past, and the company has multiple locations in the US, China, and Taiwan.

The company is associated with Apple, Asus, Dell, and HP, but it also manufactures DVD players and cell phones.

Broadcom comes from California and specializes in producing chips for computers and smartphones. Some of its major partners include Apple, IBM, Dell, Asus, Lenovo, Nintendo, Nokia, and Logitech.

Qualcomm is another company affected by chip shortage. The company specializes in wireless technology, and its chips are used on the majority of wireless devices.

We still don’t know what kind of consequences will the Qualcomm chip shortage have on the economy, but we’ll keep you informed.

Micron Technology is one of the largest manufacturers of memory and data storage for computers, so we might see a NAND chip shortage in the future.

NVIDIA and AMD are also on the list of the largest semiconductor companies. While NVIDIA focuses mostly on GPU processors, AMD is developing both graphics cards and Ryzen processors.

If these companies are affected, we’ll see a graphics card chip shortage and maybe an even bigger shortage of graphics cards in the future.

These are some of the largest chip manufacturers in the world and the shortage of chips will surely affect the partners of these companies as well as consumers that purchase their products.

How will chip shortage affect PCs?

With shortages, prices are bound to go up soon. Experts from Dell expect the price of displays, DRAMs, and NAND to go up.

NAND chip shortage will also be fueled by a new cryptocurrency called Chia. This new cryptocurrency uses storage space for mining, and to mine Chia, you need a lot of storage space.

The currency works with large hard drives and NVMe drives, and according to experts, mining Chia will cause your SSD to wear out faster.

Seagate has confirmed a surge in demand for SSDs, and many resellers are stockpiling on SSDs thus causing a shortage.

Regarding the price of SSDs, the researchers believe that the price will increase from 3 to 8% non-enterprise users.

 Samsung was also affected by this, the main cause being the power shortages that occurred in February in Texas. Regarding the shortage, here’s what the Samsung representative had to say:

“We still have an inventory of controllers in possession, allowing us to continue to produce SSDs. Some overseas media outlets have somewhat exaggerated the issue.”

NVIDIA and AMD are also affected by the chip shortage, so we might see a GPU chip shortage or a price increase in the future. The situation with graphics cards is already bad with cryptomining, and the chip shortages aren’t helping.

AMD and Intel and the largest CPU manufacturers, so it’s possible that the CPU prices will go up as the demand for chips increases.

It seems that AMD will prioritize the high-end CPUs in the future, due to the shortage. Here’s what AMD CEO Lisa Su recently said regarding the shortage:

“So I would say particularly, if you look at some of the segments in the PC market, sort of the lower end of the PC market. We have prioritized some of the higher-end commercial SKUs [Stock Keeping Units] and gaming SKUs and those kinds of things.” 

It seems that the PC industry will be affected by a chip shortage, but we can’t estimate how big the impact will be on the prices and the consumers.

How will chip shortage affect laptops?

The laptop market might be affected even more than the desktop PC markets because laptops are a computer of choice for many students and employees that work from home.

Recently Acer stated that computer chip shortage will have a severe impact on their production capabilities and this impact is expected to last until the first or second quarter of 2022.

Acer isn’t the only company affected by this, and Dell’s shares fell 1% while the HP shares dropped by 6%.

Realtek seems to be affected by this issue as well, and all laptop manufacturers that are relying on Realtek devices will be affected by this.

Since all major manufacturers are affected, we might expect a price increase for laptops across the board. In fact, ASUS and HP increased the prices for their consumer PCs, and Dell is likely to follow suit.

Despite the price increase, the PC market is expected to increase by 18 percent this year, according to analysts from IDC.

Since all major manufacturers are affected, we might expect a price increase for laptops across the board.

How does chip shortage affect Xbox?

Xbox Series X sales have slowed down due to the global chip shortage, and in the last year, Microsoft sold 3.3 million Xbox One Series X consoles.

Although the chip shortages have affected the whole electronics industry, TSMC, a chip manufacturer for Xbox, reported that its earnings have risen by 25.2% this year.

However, this doesn’t mean that the shortage is over, and it will most likely last until the second quarter of the next year, so expect Xbox shortages and price increase.

Luckily, it seems that stores have restocked on Xbox Series X/S, so you might be able to get your hands on the new Xbox.

How does chip shortage affect PS5?

The PS5 scalping was a big factor in the overall PS5 shortage, and the computer chip shortage won’t do any favors for the PlayStation fans.

Sony’s chief financial officer stated that the company was unable to meet the high demand from the customers, but that they will do everything in their power to ship as many units as possible.

Sadly, the global chip shortage isn’t doing any favors to consumers that want to get a PS5, so it might take them a couple of months or more to get their hands on a PlayStation 5.

Despite the chip shortage, Sony sold 4.5 million consoles in 2020, and 3.3 million up to April in 2021.

When will the computer chip shortage end?

Computer chip shortage has affected the whole electronics industry, and we still haven’t felt all of its consequences, so it’s going to get worse before it gets better in our estimation.

So how long with the shortage last? Some experts claim that it may last until 2023. According to them, the demand is already high, and the production rate is slowed down, so it will take some time for the manufactures to catch up with the market demands.

Some experts speculate that the situation might improve in the next six months for certain sectors, but the chip shortage will most likely remain an issue in 2022 as well.

One of the world’s largest chip manufacturers, TSMC, claims that the company will be able to catch up with the demands of the auto industry in the current month but the experts remain skeptical.

Sadly, it seems that chip shortage is here to stay, and it will likely follow us into the next year, if not longer. So, what should we as consumers do and how can we avoid the chip crisis? We’ll explain that in the next section.

Tips on how to avoid the chip crisis

Customers will surely experience a chip crisis sooner or later, and many are seeing some of its first results especially when it comes to the shortage of graphics cards and gaming consoles.

All industries are affected by this, so we will most likely see a prince increase for hardware and all digital consumer electronics.

This situation affects car manufacturers and other industries as well. So, what can we the consumers do? We need to be prepared for a price increase that will surely come in near future.

We can also try to adjust our consumer habits, and keep using older hardware and devices until the shortage of chips has passed.

If you’re looking to get Xbox Series X or PlayStation 5, you’ll have to be patient and wait for the consoles to become available in stock.

On the other hand, companies are already trying to speed up the production process and to open new facilities for chip production to meet the demands.

Sadly, this is a lengthy process and it can take months, or even more because to open new facilities, you need machines that can make chips, and those machines require their chips to work.

The White House has issued an executive order to improve the domestic production of chips. Intel is also planning to invest billions in domestic factories to combat the computer chip shortage.

TSMC plans to open new facilities in the next three years, and SK Hynix has announced that they are planning to increase the spending on chip production this year.

The EU plans to increase its chip production, and its goal is to produce 20% of the global supply of semiconductors by 2030.

It seems that chip shortage is here to stay, and in the future, we hope that companies will stockpile chips to avoid a situation like this.

We hope that you find this article informative and that you now understand better how the chip shortage is affecting the electronics industry.