Chip Shortage Leads to 2 Year Backlog!
Published at : August 23, 2021
Semiconductor Chip Shortage Leads to 2 Year Backlog on some Appliances & tech products!
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As technology continues to advance, computer (or semiconductor) chips are no longer exclusively found in computers and cars — they are now critical components for a staggering number of products
But a combination of factors has created a lack of these critical components leading to major shortages of consumer goods globally in close to 170 industries.
What’s causing this shortage?
It’s arisen from a combination of things, but it will come as no surprise that the number one reason is the current pandemic with a lack of workers and shutdowns. As people around the world had to stay at home, with extra stimulus money in the US, many people upgraded everything from home appliances to electronic devices. People also upgraded their tech to enable them to work, teach & play from home such as webcams, monitors, computers & TVs.
This year, Taiwan has experienced its worst drought in more than 50 years, creating a huge problem for chip manufacturers that use large amounts of ultra-pure water in their factory production process. TSMC's chip manufacturing facility alone requires more than 63 million litres of water a day to keep the operation moving - that’s more than 10% of the total supply from two local reservoirs
Let’s look at some examples of semiconductor chip uses:
(1) Cars: Vehicles use semiconductors for managing engine performance, safety features, navigation, and entertainment systems. A modern car can have anywhere from 1,500 to 3,000 chips.
At the start of the pandemic, car manufacturers cancelled chip orders because they thought the pandemic would hurt sales, but unexpected demand led to a shortage of chips in stock.
(2) Domestic appliances: Refrigerators, clothes dryers, cookers, TVs, laptops, even smart kettles and toasters have all been hit, resulting in long backlogs. While most retailers are still able to get their hands on these products, they are often having to settle for inferior quality and models with less technology inside.
(3) Gaming consoles, Phones and tech: The pandemic led to a rise in popularity of video game consoles as people were locked down at home. Sony says that supply shortage of the PlayStation 5 console will last into 2022, while Microsoft expected shortages of the Xbox Series X and Series S to last into at least late-2021.
So how does this affect you then?
First and foremost, the chip shortage is causing an overwhelming lack of supply across all consumer goods that require semiconductors, this means huge production delays, therefore scarcity of products and if you remember my video on supply and demand, this creates longer wait times & higher prices.
What’s being done to solve the problem?
TSMC is investing $100m in additional capacity over the next three years, while Samsung and SK Hynix, along with the South Korean government, have pledged to make $451bn of investment in capacity and incentives for chip makers.
The main reason the chip shortage has been prolonged is that it takes a huge amount of time and money to build new semiconductor manufacturing plants. It takes roughly 2 ½ years and costs around $10 billion to build a new plant.
Even when the current global chip shortage ends we’ll see more supply problems as demand for electronics increases every year, not to mention trying to play catch up with the lack of supply right now.
Chapters
00:00 - Introduction
01:24 - What's Causing the Semiconductor Microchip Shortage?
05:00 - Semiconductor Chips in the Vehicle Industry
07:12 - Semiconductor Chips in the Appliances Industry
08:11 - Semiconductor Chips in the Gaming, Phone, Tech Industry
09:11 - How Does the Shortage Affect YOU?
10:37 - What's Being Done to Resolve This Problem?
12:04 - When Will This Challenge be Resolved?
12:58 - Conclusion
DISCLAIMER
This video is for entertainment purposes ONLY & designed to help your thinking, not direct it. These videos shall NOT be construed as tax, legal or financial advice and may be outdated or inaccurate; all decisions made as a result of viewing are yours alone.
Sponsorships: Neil McCoy-Ward may earn an affiliate commission or referral bonus from any product or service listed or discussed.
⬇️ NMW 'Approved' Services: ⬇️
🧠 Private 1-on-1 Mentoring With Me: https://bit.ly/3bxv3xN
🏆 Join Our Finance Community: https://bit.ly/3pLyw0O
🏠 Create an AirBnB Business GLOBALLY: https://bit.ly/2NNEb9u
📺 My Other Video Channel (Odysee!): https://bit.ly/3kgx9WZ
🪙 Where I Buy Silver/Gold Globally! https://bit.ly/3kbgO61
🇬🇧 Where I Buy Silver/Gold in the UK: https://bit.ly/2Mj7zUO
🇺🇸Where I Buy Silver/Gold in the USA: https://bit.ly/3drNR2F
🏦 Where I Buy/Trade Crypto in Europe: https://bit.ly/3dCg74r
🏦 Where I Buy/Trade Crypto in the USA: https://bit.ly/3hb5Mya
🔑 How I Protect My Crypto (Cold Storage): https://bit.ly/3bK8oyL
As technology continues to advance, computer (or semiconductor) chips are no longer exclusively found in computers and cars — they are now critical components for a staggering number of products
But a combination of factors has created a lack of these critical components leading to major shortages of consumer goods globally in close to 170 industries.
What’s causing this shortage?
It’s arisen from a combination of things, but it will come as no surprise that the number one reason is the current pandemic with a lack of workers and shutdowns. As people around the world had to stay at home, with extra stimulus money in the US, many people upgraded everything from home appliances to electronic devices. People also upgraded their tech to enable them to work, teach & play from home such as webcams, monitors, computers & TVs.
This year, Taiwan has experienced its worst drought in more than 50 years, creating a huge problem for chip manufacturers that use large amounts of ultra-pure water in their factory production process. TSMC's chip manufacturing facility alone requires more than 63 million litres of water a day to keep the operation moving - that’s more than 10% of the total supply from two local reservoirs
Let’s look at some examples of semiconductor chip uses:
(1) Cars: Vehicles use semiconductors for managing engine performance, safety features, navigation, and entertainment systems. A modern car can have anywhere from 1,500 to 3,000 chips.
At the start of the pandemic, car manufacturers cancelled chip orders because they thought the pandemic would hurt sales, but unexpected demand led to a shortage of chips in stock.
(2) Domestic appliances: Refrigerators, clothes dryers, cookers, TVs, laptops, even smart kettles and toasters have all been hit, resulting in long backlogs. While most retailers are still able to get their hands on these products, they are often having to settle for inferior quality and models with less technology inside.
(3) Gaming consoles, Phones and tech: The pandemic led to a rise in popularity of video game consoles as people were locked down at home. Sony says that supply shortage of the PlayStation 5 console will last into 2022, while Microsoft expected shortages of the Xbox Series X and Series S to last into at least late-2021.
So how does this affect you then?
First and foremost, the chip shortage is causing an overwhelming lack of supply across all consumer goods that require semiconductors, this means huge production delays, therefore scarcity of products and if you remember my video on supply and demand, this creates longer wait times & higher prices.
What’s being done to solve the problem?
TSMC is investing $100m in additional capacity over the next three years, while Samsung and SK Hynix, along with the South Korean government, have pledged to make $451bn of investment in capacity and incentives for chip makers.
The main reason the chip shortage has been prolonged is that it takes a huge amount of time and money to build new semiconductor manufacturing plants. It takes roughly 2 ½ years and costs around $10 billion to build a new plant.
Even when the current global chip shortage ends we’ll see more supply problems as demand for electronics increases every year, not to mention trying to play catch up with the lack of supply right now.
Chapters
00:00 - Introduction
01:24 - What's Causing the Semiconductor Microchip Shortage?
05:00 - Semiconductor Chips in the Vehicle Industry
07:12 - Semiconductor Chips in the Appliances Industry
08:11 - Semiconductor Chips in the Gaming, Phone, Tech Industry
09:11 - How Does the Shortage Affect YOU?
10:37 - What's Being Done to Resolve This Problem?
12:04 - When Will This Challenge be Resolved?
12:58 - Conclusion
DISCLAIMER
This video is for entertainment purposes ONLY & designed to help your thinking, not direct it. These videos shall NOT be construed as tax, legal or financial advice and may be outdated or inaccurate; all decisions made as a result of viewing are yours alone.
Sponsorships: Neil McCoy-Ward may earn an affiliate commission or referral bonus from any product or service listed or discussed.
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