In a recent video, the Cisco chief made a startling revelation that the shortage of computer chips would persist for most of this year. Many companies that have to integrate circuitry in their products, e.g. HP or Ford Motors, have had to contend with a global shortage of semiconductors due to Covid-19 pandemic related factors. The Cisco chief has disclosed the following,
"We think we've got another six months to get through the short term. The providers are building out more capacity. And that'll get better and better over the next 12 to 18 months."
The semiconductors have so many applications, some of which are crucial for national security, e.g., semiconductors in guided missile systems, nuclear power stations, and even as small a thing as a traffic light. The technologies that have newly emerged as crucial, e.g. Artificial Intelligence, 5G and the Internet of Things, also require semiconductors to operate. Without these technologies, the century cannot proceed. But the technologies have had to contend with an unexpectedly severe crunch of chips globally.
Mr Robbins, the Cisco chief's opinion matter because Cisco is responsible for 85pc of internet traffic going through his company's technologies. He has warned, "Right now, it is a big problem," he says, "because semiconductors go in virtually everything."
Western Nations Move Towards Self-Reliance
Many companies like Intel are seeing their reliance on other manufacturers for such critical hardware as problematic. They have started taking steps to become self-reliant. For example, Intel has announced an investment worth $20 billion to expand its semiconductor production, including two plants in the Arizona state. One would have expected that the share prices of most companies would have become unstable. Still, the proactive attitude of companies and their plans for long-term expansion has led to a surge in investor confidence and stability of the stock market.
US President Joe Biden has also urged US business people to focus on self-sufficiency. Despite the tech war with China, he has emphasized making the US a leader in computer chips. The computer chip market is dominated by East Asian countries of TSMC and South Korea's Samsung. At the same time, only smaller players exist in western countries. Due to China's ambitions to reunite with Taiwan, the global chip market could be held hostage by Chinese whims. That is another factor driving the need for self-dependence.
Who Is To Blame?
Like many of our current woes, the chipageddon can be attributed without any second thought to the Covid-19 pandemic. Because of the global lockdown, most people have had to work or study from their homes. The household which had needed only one laptop now require a computer for each member.
Then the demand for cars went down, so many chips used for car manufacturing were used to make digital products. Still, car sales normalized worldwide, and chips saw a dip again, which was more severe.
Why Should The "Chipageddon" Worry Lay Consumers?
These semiconductor chips are only seen by a few who make the hassle of repairing their electronics. Then they can see the motherboard and lots of semiconductor chips arrayed neatly and beautifully on the board. But for most consumers, this is a rare sight. Despite their smaller size and out-of-sight-out-of-mind status, their importance cannot be overstated.
All digital products use these chips in one way or another. The problem surfaced last year when Apple had to delay the release of iPhones, and Xbox/Playstation could not meet the demand of its users. But the situation has only worsened this year. Samsung struggles to fulfil the orders for memory chips. At the same time, Qualcomm, which runs the processors that run the computers and phones, faces a similar problem.
For now, consumers need to remember that their waiting times for cars will significantly increase, some gadgets may become harder to locate, supply will be limited, many phones will become even more expensive, and if you want a device but you're waiting for the right moment, this is it.