The causes
There are many factors across the globe which have caused this shortage. The first clear cause has been the COVID-19 pandemic. The global lockdowns meant that manufacturing facilities had to temporarily close down, as well as staff isolating which have had a knock on effect with production times.
This leads onto the next cause which is the increased demand for IT hardware. The new way of working or the ‘new normal’ has seen a lot of office-based staff now working from home on either a full time or blended basis. This has resulted in orgnaisations having to buy and provide more IT hardware such as laptops, monitors, PCs and mobile phones. All of which has created an increased demand on the supply base which was already struggling.
Another cause has been the ongoing trade-war between the US and China. In 2020, the US Government placed restrictions on Semiconductor Manufacturing International Corporation, which is the biggest manufacturer of chips in China. As a result, manufacturers in the US now have to supply their chips from other manufacturers which are already producing at max capacity.
When will it end?
According to an article published by Tech Monitor, the ‘Semiconductor supply had been expected to rebound by the end of 2021, but the global chip shortage is now set to last into next year and could remain until 2023, experts fear. The current investments in capacity will not make an impact for some time’ the article also stated that ‘The final quarter of 2021 could prove a key indicator as to how long the chip shortage will continue’. You can read the full article here.
Other news outlets such Yahoo Finance have stated that ‘Most analysts do see shortages being resolved by the end of 2021, but that would still require almost all of 2022 for this chip supply to make its way through the supply chain to end-users’. You can read the full article here.
How can YPO help?
We have an established route to market for technology hardware and software through our Technology Hardware, Software and Services framework. The suppliers awarded onto this framework are industry leaders and have strong relationships with manufacturers across the world. We receive regular updates from our suppliers on the ongoing ‘chipageddon’ situation to ensure we can pass on current and up to date information to customers and provide the support you require.
Top tip – Many of our suppliers have advised that customers forward plan on IT upgrades/purchases to ensure that the extended lead times are mitigated against. Suppliers have also indicated that it’s important to have regular communication with those in the industry to understand where certain product lead times are and where the pinch points of production are sat.
Speak to the team for more information: [email protected]
.ashx?h=225&iar=0&mh=411&mw=730&w=400)
.ashx?h=122&iar=0&mh=122&mw=730&w=730)
.ashx?h=340&iar=0&mh=411&mw=730&w=600)
.ashx?h=118&iar=0&mh=122&mw=730&w=730)
