Chip shortage may hit tech makers

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Scitech Report

5 April, 2021 12:00 AM printer

Chip shortage may hit tech makers

A global shortage of one crucial piece of technology is causing delays in everything from cars and televisions to video game consoles and Australia’s National Broadband Network rollout.

A temporary shutdown in the production of silicon computer chips at the start of the coronavirus pandemic, as well as severe storms in Texas causing more recent delays, has caused worldwide chip shortages, with a knock-on effect for the production of phones, laptops and even automobiles.

Samsung, which is the largest manufacturer of computer chips in the world, as well as one of the biggest users, has said the chip shortage comes amid rising demand for consumer electronics during the pandemic, reports the Guardian.

“There’s a serious imbalance in supply and demand of chips in the tech sector globally,” the company’s co-chief executive, Koh Dong-jin, said.

Samsung has indicated it could delay the release of the next Galaxy Note smartphone until 2022 as a result of the shortage.

Apple, the world’s biggest buyer of chips, was one of the worst affected companies, delaying the launch of the iPhone 12 last year as a result.

A winter storm in Texas in February forcing several chip factories to temporarily halt production amid power outages did not help with the ongoing crisis.

Manufacturers are slowly increasing capacity to meet demand but there are still growing shortages in products that need semiconductors to function, from televisions and phones to the new Xbox and PlayStation video game consoles.

“Covid-19 has had two major impacts on the availability of computers through the initial closure of factories and then the global surge, including in Australia, for new computers and IT equipment,” the Australian Information Industry Association’s general manager of policy and advocacy, Simon Bush, said.

The association estimates delays in large IT orders for business and government of at least six to eight weeks.

The demand for chips is now starting to have a flow-on impact on a range of industries. The government-owned company rolling out Australia’s $57bn National Broadband Network (NBN) had to stop connecting new customers via its cable technology in February because it had a fast-dwindling supply of modems it had been unable to replace.

This week the company announced it would resume orders for new connections to the cable service from May 24 – nearly four months after the pause. In that time, NBN Co has connected 230 medically-vulnerable customers to the NBN as a priority using the remaining supply.

More modems began being received in early March, but the company now needs to work on a backlog of 31,000 orders before new orders can be taken.

“We are confident that we will receive regular deliveries of new HFC modems in the weeks and months ahead to enable the resumption of new HFC connections from 24 May 2021,” NBN’s chief customer officer, Brad Whitcomb, said.

Adding fuel to the fire, at the start of the pandemic car manufacturers cancelled their orders for semiconductors as a result of poor car sales, as people opted against buying cars while in lockdowns across the globe.

The semiconductor manufacturers quickly used that excess supply to meet the increasing demand for personal electronic devices, but as sales of new cars have since started to rebound, car manufacturers have struggled to find the chips required.

The director of innovation and strategic engagement at Australia’s Federal Chamber of Automotive Industries, Peter Griffin, said some manufacturers might have a stockpile and stock was beginning to improve but there could be delays in new cars being available in Australia for the months ahead.

“If you’re missing something, you just can’t make the car and hence you’ve got the delay,” he said. “And there is generally some time between an order being made in the dealership to delivery to production, but in some cases that has stretched to quite a few months, depending on the vehicle, depending where it’s coming from.”

Cars are not manufactured in Australia, meaning orders will need to arrive from overseas. According to Bloomberg, several companies, including Ford, Toyota, Nissan and General Motors have made changes to their production as a result of the ongoing superconductor shortages.

Electric car manufacturer Tesla said in February it was still determining the impact of the shortage.

US consulting firm AlixPartners has estimated the shortage could cost carmakers US$61bn (A$82bn) in lost revenue this year.