The Current State of Global Chip Shortage, and Its Economic Impact

One giver, several takers – that’s the perpetual state of semiconductor chips, a shortage of which has partially paralyzed the world economy.

Global computer chip shortage, which affected automobiles in its inception, is now spreading out to other industries. Supply chains and manufacturing of most industries are either functioning at a lesser speed or on the brink of shutting down. From mobile phones to healthcare devices, the shortage has created a congestion, which is more likely to worsen in the future. And more than commerce, what is actually at stake here is science and innovation. 

Semiconductor chips are literally the backbone of several essential industries, especially in a pandemic-stricken world. The rise of a ceaseless infection and its resulting restrictions led to mass manufacturing and supply chain disruptions. Ever since then, the shortage has only increased, and if experts are to be believed, it may as well continue until (or beyond) 2022.

ALSO READ: Will the Delta COVID Variant Derail Current Economy?

How deep is the global economy affected 

As much as the media has publicized the issue, the global chip shortage has actually led to locked factories, delayed supply chains, and, in most cases, inflation.

A Goldman Sachs survey revealed that the impact has been felt by no less than 169 countries. That’s nearly the entire world. 

This isn’t bad news for providers alone. Consumers too will face the impact, directly or indirectly. For instance, the hike in prices of consumer goods and electronic appliances is an outcome of chip shortage. 

Companies hit recently

On 13 October 2021, Bloomberg reported, ”the global chip shortage has finally caught up to Apple.” This may directly hit the production of its most popular product, iPhones.

Dr. Florian Lücker, senior lecturer at Bayes University, hints at the future of Apply by saying, “Chip shortages have been occurring for a couple of months and a quick solution is not in sight. The production slash of iPhone 13 is particularly concerning because companies like Apple have market power to access their supply. The innovative smartphones are sold with healthy margins to consumers and, as a result, Apple would be willing to pay higher prices for chips if they were available.” 

Dutch health technology company Philips said on Monday it was looking to cut down its outlook for sales and growth this year owing to the intensifying shortage. 

The state of a real solution 

According to the current state, a vast majority of the world’s chips come from countries like China and Taiwan. The US leads too, but in terms of R&D activities only, which changed recently when it decided to address the crisis via a discussion hosted by The Washington Post and presented by IBM. Scheduled for October 20 at 10:30 a.m. EDT, the guest list includes Secretary Gina M. Raymond, US Department of Commerce, and Senator Todd Young. 

Some most popular semiconductor chip makers, including TSMC (Taiwan Semiconductor Manufacturing Company), Samsung, and Intel are announcing new investments to ramp up production lines. However, the new plants will take at least two to three years to complete. 

Suraj is a passionate blogger who writes for a global audience. His writings can be inspired from a myriad of topics to anything distinguishable that keeps a reader hooked. He has written for many websites and also been showcased as a guest author. Suraj lives in India right now.

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