By: Scott Steinberg
Having trouble finding a PlayStation 5, cutting-edge laptop PC, or premium smartphone lately? Join the rest of the U.S., which is running short on semiconductors – electronic parts crucial to the operation of many popular high-tech devices – in the wake of the COVID-19 pandemic and rising geopolitical volatility. A key component in leading consumer electronics and many modern automobiles, their absence has been putting the pinch on the retail availability of a wide range of products, and shoppers’ pocketbooks, since last year.
As President Joe Biden recently explained to top business executives, America is looking to address this ongoing shortage (which has greatly impacted myriad sectors from the medical to consumer electronics industries) by building its own chip infrastructure. While domestic companies such as Intel and AMD still develop and produce semiconductors locally, or so the thinking goes, much of the development and production remains offshored to firms such as Taiwan’s TSMC and Korea’s Samsung. However, due to U.S. restrictions against companies like China’s Huawei, many companies have been stockpiling chipsets which has only led to further supply chain shortages. Noting this, restoring collaboration amongst worldwide semiconductor firms will be top of mind for technology leaders this year, as the company’s deputy and rotating chairman Eric Xu recently told industry watchers at its global analyst summit. Whether or not this collaboration will manifest though still remains yet to be determined.
So what does all this change mean for everyday technology fans like us – and the availability of all your favorite digital diversions? You may be surprised. For starters, it might help to put things in context. A major consumer of electronic goods, the U.S. (like other mass-consuming nations) currently faces skyrocketing demand for semiconductors, which are used in the manufacturing of popular devices like video game consoles, computers, and tablet PCs and are continuing to grow in demand. But at the same time it’s also staring down a rising shortage of these key components – also used in medical devices, cars, and commercial equipment – due to supply chain disruptions. On the one hand, COVID-19 recently caused serious hiccups in terms of production and prompted many companies to cut advance orders of these key materials. On the other hand, a variety of global transportation hiccups, fires at leading manufacturing plants, and rising geopolitical tensions have also led to a limited supply of semiconductors becoming available from overseas companies.
For everyday shoppers, these concerns have translated to:
- Harder to find items on store shelves
- Higher prices on popular products
- Limited supplies of favorite goods
- Less choice in available selection
- Longer wait times and lower inventory levels
- More unreliable customer service and support
Haven’t got your hands on an Xbox Series X yet? Wondering why prices on computer parts are spiking? Curious why you can’t find this year’s model vehicle in stock, even as it promises to cram more electronic capabilities into the driver’s seat? A combination of unexpected events, unfortunate timing, and poor inventory planning have conspired to keep you from making various upgrades or getting your hands on tomorrow’s most advanced solutions.
It’s a problem that government leaders hope to fix by investing in America’s chip infrastructure, says President Biden. His administration is currently lobbying Congress to invest $50 billion in the U.S. semiconductor industry as part of the President’s $2 trillion infrastructure proposal, with an eye towards expanding U.S. chip manufacturing. Top auto leaders especially have looked to the Administration for support here – since vehicles are becoming more computerized and technically capable with each passing day – as their industry has been one of the hardest hit. But semiconductor plants are not easy or affordable structures to build, and take time to roll out, ensuring that it will be months, if not years, until shortages are resolved. In fact, it may not be until 2022 that a significant supply of semiconductors hits the market and could take even longer for domestic production to ramp up en masse.
However, even with the investment in U.S. semiconductor manufacturing, supply chain problems may take significant time to resolve if geopolitical tensions remain high. According to Ars Technica, semiconductor manufacturers in other parts of the world besides Asia have increased production to offset these concerns but are already running above 90% capacity. Restrictions will help serve to spur growth of American industry, decrease reliance on outsourcing, and help boost domestic product, proponents argue. At the same time, detractors suggest that they’re stifling innovation and slowing the rollout of billions of dollars’ worth of new technologies such as the rollout of 5G networks.
Wherever you sit on the topic, it’s certain that chip manufacturing is a lengthy process by nature, and costs of production and sales are only expected to increase in coming years. Coupled with skyrocketing demand for semiconductors – found in everything from portable devices and fitness gadgets to smart speakers and networking equipment – it all adds up to more of a pinch on the marketplace, and our wallets. In other words, don’t expect to see the world’s appetite for semiconductors cooling anytime soon, or relief at retail for many moons. Until manufacturing and supply chain leaders worldwide find a way to collaborate, adopt new production methods, and establish mutually agreed-upon standards, everyday technology and gadget fans like us will continue to feel the pinch.
Does the average retail shopper need to know much more about how semiconductors work, let alone the process of ordering them? Not particularly. But keeping an eye on the current situation is important, as resolving supply chain issues will help to bring prices on many popular products down, increase their availability, and minimize the hassle that has been steadily growing with regard to getting one’s hands on favorite high-tech items. As for the immediate future, well – here’s (sigh) hoping that you don’t mind waiting to receive that long-awaited preorder for anywhere from a few more months to another year. It may take some time for technology leaders to reboot their strategies here.