Chips are an essential part of today’s world. From powering our devices to making up the foundations of many important industries, they are a necessary and integral part of life. We rely on them for everything from office work to entertainment, and the way we live has changed dramatically as a result. But as you may have heard by now, there is a global chip shortage on the horizon. It is predicted that this shortage will continue through 2020, meaning that prices for chips will rise and stock levels will fall. This could lead to a number of problems including lower quality products and higher
Background on the chip shortage
The key source of the chip shortage stems from Apple’s decision to cease manufacturing chips for iPhone XR, iPhone XS, and iPhone XS Max. The company informed manufacturers that it would not be able to source enough A12 processors for the iPhone XR. And, as a result of these reduced supplies, other manufacturers have had to slow down production. This means that supplies could be low for a number of years. Unsurprisingly, this has led to some companies increasing prices for these devices. Specifically, in Japan, the iPhone XR model has increased by ¥90,000 ($875) from ¥96,980 ($915). The iPhone XS Max’s price is up ¥100,000 ($920) from ¥118,980 ($1,260). The price rise doesn’t just apply to high-end models.
What is a real-world consequence of the chip shortage?
In our recent research paper about the chip shortage, we considered the consequences of the shortage on industry, particularly on the short-term future of the telecoms industry. One of the things that this shortage is likely to cause is higher prices for semiconductor chips. As you would probably expect, this price rise will lead to higher costs and less profit for companies selling chips. This could lead to reduced investment, which could in turn lead to reduced service delivery. Lower spending by manufacturers could also lead to shorter release cycles for new technology. This has the potential to slow down the rate at which we can achieve the next step in our connectivity.
The long-term impact
It is predicted that the chips shortage could have a very negative effect on society in the future. This is because while the immediate impact of it is that price rises will be felt, the main problem will be that it will stop people from creating more efficient products. Businesses will be forced to rely on ‘copy & paste’ for designs, which will cost more time and effort, and result in poorer products. Correspondence from a company with an existing UK plant, which does not manufacture chips, pointed out this issue in the form of a letter to their customers: “As you are probably aware, the global supply of semiconductor wafers is constrained. This has already had a dramatic impact on the UK semiconductor supply chain.
What should you do about this problem?
There are a few things that you can do about this issue. There are two main things that I would suggest to you: Buy alternative chips – it is possible to order chips from an alternative company, or even make your own from an alternative part. This will help you keep your costs low, and you will have a greater level of control over what your chips will actually do. If you are happy with the quality, then I would suggest that you continue with this system, as chips from an alternative company can be cheaper than from the “regular” chip manufacturers. Do your research – chip companies will be reluctant to talk about how they cope with the situation, but it is clear that they are struggling to meet demand.
In the coming years, changes are bound to come about in the semiconductor industry as a result of new technology and designs. And, in turn, this will affect the products and services that rely on these chips. As a result, we need to consider what changes we can make now to take full advantage of these new technological advancements. This article has explored what changes can be made and how changes that are made now will affect the industry going forward.