In the last few years, there has been a lot of talk of the Internet of Things technology and the benefits this concept can bring to our modern society. In general, it’s safe to say that we’ve become rather dependent on technology and this doesn’t necessarily have to be a bad thing. In fact, technology like IoT has made our lives much easier and simpler. However, this year we’ve been experienced something we haven’t had the displeasure of experiencing for a long time. The shortage of crucial equipment is needed for manufacturing devices we use every day. In other words, we witnessed the semiconductor shortage. Today we are going to talk about this crisis and the ways it can affect your life.
What Is A Semiconductor?
It would be wrong to talk about the semiconductor shortage without first explaining what a semiconductor is. Here’s a simple definition. Semiconductors, chips or microchips, are tiny pieces of electronics that host billions of transistors within them. The transistors allow or don’t allow the electrons to pass through them. Why are those chips so important? Well, they are found in most of today’s modern products like phones, dishwashers, and cars. They are essentially the “brain” of those devices. They are in charge of running software, manipulating data, and controlling functions.
Why Are We Experiencing A Shortage Of Semiconductors
Well, first of all, you need to know that the manufacturing process is very pricey. This means that there aren’t too many factories that manufacture semiconductors.
However, the main reason why we are experiencing the shortage of chips is, of course, the COVID-19 pandemic. Once the virus broke out, many factories closed. This resulted in the shortage of supplies needed for chip manufacturing. Those supplies were unavailable for a few months. Also, plenty of industries that use chips for their day-to-day operations like shipping, manufacturing, and transportation faced labor shortages. Some of the factories had to shut down due to this situation.
Then, more customers were looking for electronic devices simply because they had to find ways to kill time during the lockdown. In normal conditions, this increase in demand would be a good thing, but not in this situation.
There was one more thing that contributed to the chip shortage. The COVID-19 pandemic caused Asian ports to shut down for a few months. Why is this important? Well, it’s simple, 90% of the world’s electronics go through China’s Yantian port. The fact that this port was closed caused plenty of issues when it comes to the shipping of electronics and parts required for chip manufacturing.
Other than COVID-19 there were other factors that slowed down the production of chips. For example, Japan’s Renesas plant, which is responsible for about ⅓ of the chips used in cars, was damaged by a fire in March 2021. They started working again in July. Also, the winter storms in Texas at the end of 2020 caused some of America’s chip plants to stop production. And, as the last nail in the coffin, the droughts in Taiwan in early 2021 drastically slowed down the production of chips simply because this production process requires plenty of water.
How Does This Shortage Affect Your Life?
Now we come to the most important question. How does this crisis affect your life? Here’s how.
As we already stated, people use devices with chips on a daily basis. This should tell you enough about the seriousness of this shortage. One of the ways the shortage will affect you is by hurting your finances. In other words, the prices of devices will likely go up and the production of other devices will be delayed. The automotive industry will be affected, therefore, if you plan on buying a new set of wheels, there’s a strong possibility you won’t be able to find the desired model.
However, the other industries and niches will also have to adjust to this new situation. For example, in July, Apple CEO Tim Cook announced that the chip shortage will likely delay iPhone production. Also, Sony officials said that they can not keep up with demand for the new PS5. Of course, some companies, like the ones we mentioned, will survive the crisis. However, one thing’s for sure, the semiconductor shortage will change the market. This means that you, as a consumer, have to treat your current devices carefully and wait for a good opportunity to buy new ones.
Fortunately, most of the COVID-19 measures have been alleviated and the factories are working as before. This means that the factories will be able to make cars, the Internet of Things items, and smart appliances like they did before the shortage. However, this has been a wake-up call for most manufacturers and, hopefully, they will be better prepared for the next crisis.
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