Computer chips are integral to a number of modern electronic products. The chips are tiny transistors made from silicon and allow computers, smart phones, appliances and other electrical devices to function.
The current global scenario has seen growing concern among tech manufacturers and has led to delays in production and roll-out of new products and shipment delays.
The challenges can be traced back to the Covid-19 Pandemic which saw a spike in demand for electronics globally in response to remote working, virtual classes and meetings among other responses to the pandemic. The increased demand for the personal electronics got to a point where production could not keep pace with demand.
This was also at a time when there has been a global demand in micro-chips in recent years occasioned by demand in the automobile industry among other sectors that are being automated.
“Once coronavirus-related lockdowns expanded to other regions, there were new, sudden pockets of PC demand for remote workers and online classrooms that PC manufacturers could not keep up with,” a study by Gartner, a leading research and advisory company read in part.
The global chip shortage has resounded across industries ranging from consumer electronics to automobiles as manufacturers vie for a silicon.
The shortage and disruptions have led to empty store shelves, production bottlenecks and drop in supply of electronics, global studies have shown.
Locally, importers of electronics told Doing Business that they have noted delays in delivery of electronics in recent months which have been explained by their suppliers as delays in the value chain. This they said is especially the case for laptops and related accessories.
Nadine Tuyisenge told Doing Business that beginning the third quarter of 2020 electronics deliveries have been taking longer which have consequently seen them face challenges when meeting large volumes of demand such as by schools and corporate organisations.
Gartner, a leading research and advisory company, said that by the projections, the shortage’s end is not insight and could persist throughout 2021, adding that the shortage impacts all chip types and that chip prices are rising.
The challenge and shortage in 2020 is a result of more countries and large firms attempting to stock chips to reduce potential interruptions in future. This has further created scarcity in the market with no end in sight.
“The current scenario looks concerning for tech manufacturers, as mentions around new product and shipment delays rose by around 23 per cent in Q1 2021. Additionally, 3 per cent of the overall shortage mentioned in Q1 2021 highlights that the adverse impacts are likely to last until 2022 or early 2023 due to the huge boom in demand,” a study by GlobalData added.
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