If you are looking to purchase your desired graphics card or gaming console, odds are that you will find them out of stock or way out the budget you intended on investing. There are several reasons which are playing a crucial role in the recent price hike. A major issue among them is the scarcity of silicon chips.
A global scarcity of semiconductor chips is currently affecting every market and aspect of our everyday lives, both directly and indirectly. Because of the unplumbed nature of the crisis, some businesses have cut inventory in half and are suffering significant financial losses.
Silicon chips are like the backbone of modern technology. The spectrum of silicon chip usage is much bigger than we think. Apart from computers and mobile phones, cars, air conditioners, cameras, and many other technologies that require central processing power use silicon chips to process every information and command.
Recently, there has been a shortage of semiconductors globally, and many companies worldwide are suffering from it. 'We're discussing a possibly $500 billion semiconductor industry that makes silicon wafers through dynamic processes that enable us to do anything from drive to play. For sources, our internet-connected planet is entirely reliant on electricity, semiconductor processing, and each other.
A drastic increase in demand caused by the pandemic has sparked this shortage. According to the World Semiconductor Trade Statistics organisation, after declining between 2018 and 2019, global semiconductor market revenue increased by 6.5% in 2020, to $439 billion. In 2021, it is expected to reach $469 billion.
The rise in demand is due to the increased use of mass technology when under lockdown. In the aftermath of the Covid-19 pandemic, demand for PCs increased as businesses worldwide shifted to remote working and schools shifted to online learning. At the same time, the rise of cloud computing necessitated more server chips.
Since few people were travelling everywhere and optimism in the economy was poor, the Covid-19 pandemic caused a 50% drop in car sales at first. Automobile manufacturers responded by limiting production and reducing parts orders.
Since modern vehicles have hundreds of computer chips to monitor anything from acceleration to steering and engine efficiency, this involved a large number of computer chips. As a result, according to research firm IHS Markit, 672,000 fewer vehicles will be produced during the first quarter of 2021 than expected.
In short, the semiconductor industry has been struck by a perfect storm of concerns. The Taiwan Semiconductor Manufacturing Company (TSMC), which has been given a double edge sword, produces a large portion of the world's inventory of computer chips.
The trade dispute between the United States and China is amplifying the pandemic's problems.
After the former US president Donald Trump put Huawei on a trade blacklist over national security concerns, US chipmaker Xilinx had to halt some shipments to the Chinese consumer electronics giant Huawei. China is now planning to develop its own chip manufacturing capability.
The United States is getting on board, enlisting TSMC to create a $12 billion chip factory on its territory. All need to be able to guarantee their own chip supply, and the recent crisis has raised the stakes even higher.
As if that weren't bad enough, the weather is working against several chip companies.
The production method necessitates a significant volume of water. TSMC produces chips for thousands of businesses and uses 156,000 tonnes of water each day on average.
However, due to severe droughts in Taiwan, rivers are drying up, and the company is now transporting water to the plant in trucks. 'There's even more to come. In October 2020, a fire broke out at a chip factory in Japan, and plants in Texas were briefly shut down due to an unseasonably cold spell.
Automobile manufacturers such as Ford, Toyota, and Volkswagen have all partly halted factories in recent months due to a lack of chips required to assemble their vehicles. Sony 'hasn't been able to manufacture as many PS5 game consoles as it has anticipated, Microsoft is reducing Xbox Series X demand, and Samsung is considering halting the Galaxy Note.
If you are trying to buy the latest AMD processor or NVIDIA graphics card or your favorite gaming console you might have noticed that there is a stock crisis going on right now. Graphics cards are being sold at double the prices they were intended to be sold at and you can't even find the latest graphics cards in the market right now. Although the GPU crisis has many other factors like hoarding, miners buy graphics cards using bots. But the silicon crisis adds more fuel to the fire by making it hard for the manufacturers to produce the amount of GPUs they intended to make.
According to some experts, manufacturing could take up to a year to get back on track, and stock levels at different firms could take another six months to return to normal. Broadcom, a US chipmaker, claims that 90% of its 2021 production is already sold out. In any circumstance, manufacturers are increasing capacity now, but it will require time for this to have a significant impact. A chip will take up to 26 weeks to develop, and certain devices need over 1000 steps to manufacture.