Chips are projected to remain in short supply in the coming months as demand remains higher than ever, according to CNBC. The shortage started as the surge in demand for personal computers, and other electronics grew due to school and work-from-home trends during the pandemic.
- PC sales rose 4.8% in 2020 to 275 million units, with over 10% growth in the holiday season, the highest annual increase since 2010.
- Other electronic gadgets, including game consoles, headphones, and smart home products, also grew, contributing to the rise in chip shortage.
- Business shifts to outsourcing also hurting factories as foundry companies are largely contracted to make the chips.
- Foundry companies have prioritized tech companies, which are “the volume guys,” since they have higher margins and never cut down their orders, which has created chip shortages for autos.
- U.S sanctions on Semiconductor Manufacturing International Corporation is also preventing the company from getting chip production gear and made it difficult to sell finished products to American companies.
- Chip shortages is also linked to stockpiling by companies that were anticipating shortages due to Covid related disruptions and U.S sanctions.
Global chip sales is expected to rise by 8.4% in 2021, up from 2020’s $433 billion.
