What Is The Global Chip Shortage?

The global chip shortage, otherwise known as the semiconductor shortage, has spread worldwide. This latest chip shortage began in 2020 as the demand for chips exceeded the supply. What exactly is it and how long will it last?

What exactly is the global chip shortage?

This shortage directly affects the semiconductor industry and basically every industry that relies on it. These chips are critical for businesses, as they order in bulk and are used in literally every electronic device they sell.

Because of the disruption these chips have caused, consumers have been experiencing a shortage of almost all products since 2020. It has quickly become a driver of global price increase on nearly every consumer good.

What contributed to the global chip shortage?

Covid-19 has managed to be the main driving factor. This resulted in two main issues: Almost 13% increase in global demands for laptops and PCs due to the remote work situation, and disruption in the supply chain industry due to labor shortages.

Other factors include the rise of cryptocurrency and droughts in Taiwan. Cryptocurrency amplified the demand for chips because of crypto mining, and Taiwan is one of the major global producers of chips. The droughts adversely affected the production of ultrapure water required to clean the chip-making factories and silicon wafers (which fabricate silicon ships in volume).

When is the shortage expected to end?

Intel, AMD, and various other industry leaders have predicted that this will last until the end of 2023. However, the decline of the crypto market has actually resulted in the decline of Ethereum mining. Because of this, graphics card and CPU stock have slowly recovered from the shortage. But due to new technology coming out almost daily, it’s impossible to really predict a recovery date.