Technology supply chains have been world-renowned for being some of the most dynamic and strongest for over a decade. Currently, companies are having problems procuring computers and networking equipment because of the ongoing semiconductor shortage. Let’s take a look at the issue in today’s blog.
How the Semiconductor Shortage was Fueled by Surging Demand
Let’s start with demand. In 2020, the global demand for new computers was extraordinarily high as people were forced to social distance in an effort to keep COVID-19 from spreading. In much of the world 2021 has seen the same problems. This has been a major boon for the semiconductor industry that saw its sales grow to nearly half a trillion dollars in 2020.
One of the driving factors is the increase in the PC market itself which hadn’t grown as fast as it has in the past year in over a decade. This increased PC demand, sales of other devices, as well as a major increase in cloud computing usage by individuals and businesses has led to an industry forecast of increases of another 12 percent in 2021 to $511 billion. This massive spike in computer sales directly contributed to the current semiconductor shortage.
This seems amazing, right? Some good news for some people in the face of a horrifying pandemic. Not so fast. The industry, like many other industries that saw demand skyrocket over the course of the pandemic, wasn’t ready for it. The shortage began in the second quarter of 2020 and quickly caused major supply issues for manufacturers and value-added retailers.
This Doesn’t Just Affect Computers and Smartphones
A semiconductor shortage has a major effect on the world economy. It isn’t just the computer and smartphone manufacturers that are dealing with a shortage. Automakers were the first industry to get hit with problems from the shortage. Some have halted production of new vehicles as a response.
Electronics makers are now facing tough choices as essential hardware remains unavailable for the foreseeable future. The shortage has begun to affect TV and electronics manufacturers as well. In some places, manufacturers are beginning to buy up available chips so they can fulfill their orders leaving nothing for smaller organizations.
The Shortage’s Effect on Your Business
We don’t know yet exactly how this shortage will impact your business, but experts remain cautious. People in the know are not too optimistic about the problem. Businesses will be on the hook for a lot of the shortage as they are the ones that typically need hardware and increased data capacity affected by the semiconductor shortage.
Businesses will see inflated prices for the next four-to-six fiscal quarters before supplies are able to catch up with demand. At Macatawa Technologies, we will be monitoring the situation to ensure that our clients get the resources they need for a price they can afford.
