The global coronavirus pandemic brought with it a wide variety of unexpected consequences, including significant supply chain disruptions. One of the most disruptive aspects of the supply chain shakeup has been the global chip shortage. Chicago businesses face price increases and shortages of products, including computers, printers, and smartphones, as a worldwide shortage in computer chips grows.
Computer chips, also known as semiconductors or microchips, are literally the ‘heart’ of billions of products, ranging from smartphones, data centers, computers, laptops, tablets, smart devices, vehicles, household appliances, life-saving pharmaceutical devices, agri-tech, ATMs, and more. They are small, flat pieces of silicon with electronic circuits on them and function as tiny electrical switches that turn the flow of electricity on or off. They enable vital functions such as high-end computing, operation control, data processing, storage, input and output management, sensing, wireless connectivity, and more.
What Caused the Global Chip Shortage?
As with most things, the pandemic got in the way of production. It became harder to deliver resources to factories, harder for factories to reach quotas, and harder for products to get distributed worldwide. That coupled with people and businesses embracing remote work led to a massive demand for extra computing hardware and other electronic devices, and chip manufacturers suddenly found their supply being outstripped by demand. Orders began to pile up as manufacturers struggled to create enough chips to meet the new demand levels. The result has been an increase in prices and a lack of inventory, causing delays in deliveries.
Geopolitical tensions between the US and China also contributed to the shortage. In the last few years, the US government has imposed sanctions on major Chinese consumer tech companies, such as Huawei, blocking their access to the most advanced chips and prompting them to stockpile as many as possible. Right now, there are only a small number of chipmakers across the globe, and much of the world’s supply of semiconductors comes from Asia – the biggest chip manufacturer in the world is TSMC (Taiwan Semiconductor Manufacturing Company), a company based in Taiwan.
Demand for semiconductors is still incredibly high, and chipmakers are racing to catch up with the rising demand. American chip manufacturer Intel announced plans to scale up their chip production, and TSMC and Samsung plan to build factories in Arizona and Texas, respectively. The US government has also proposed a $50 billion stimulus for the US semiconductor industry in an effort to bolster American chipmaking capabilities. While these plans are promising, it will take years before these factories can ramp up their production levels.
What Does This Mean for Your Chicago Business?
As the global chip shortage continues, Chicago businesses will face a lot of challenges. If you rely on microchips to manufacture your products, you’ll experience higher supply costs, affecting your ability to produce the same product volume as you did in previous years. Because of the increased manufacturing cost, you may be forced to pass these additional costs to your consumers. For example, Apple recently announced that the chip shortage is expected to delay iPhone 12 Pro production and is already impacting sales of iPads and Macs. At the same time, Sony announced that PlayStation 5 would remain in short supply through 2022 due to the crunch.
Sourcing new computers and other electronic equipment will also be challenging. Some popular laptops, phones, and printers, which all contain semiconductor chips, now cost more because chip companies have raised the prices they charge tech brands and retailers. According to the Wall Street Journal, HP has increased the price of printers by more than 20 percent over a year. Because of the shortage, you’ll also have to contend with delays, which can take up to six months.
But with some foresight and planning, and the help of your local IT support, CTI Technology, you can avoid delays and ensure you have access to the technology you need and the ability to minimize any inconvenience to your business. Take time to assess whether you need to acquire new technology as part of your ongoing hardware lifecycle management to ensure you have inventory on hand to replace non-functioning equipment. This may mean evaluating warranties and creating a more detailed schedule to keep up with equipment upgrades and replacements.
If you think you might need any new hardware in the next six months, consider placing your order as soon as you can. That way, if you encounter any delays or supply chain issues, your vendor still has plenty of time to deliver. Last-minute replacements, especially for specialized hardware, could be a real challenge during this shortage. You should also develop plans to extend the life of your existing technology until new equipment can be received.
Apart from planning and being proactive, you should also be flexible. Not every purchase will be one you can prepare for – someone with a stolen or damaged laptop will need an immediate solution. So, even if your company may have a brand preference, but that brand has long waiting times, you may have to consider other brands that can deliver what you need immediately. It might not be the exact brand, model, or device you’re used to, but it will allow your employee to stay productive. You should also consider cloud solutions that can help alleviate the effects of the chip shortage – cloud computing will significantly reduce the need for hardware.
Stay Ahead with CTI Technology
It’s clear that the global chip shortage shows no sign of abating anytime soon. In fact, it seems to be getting worse. There’s no reason to expect a sudden surplus of semiconductors to become available anytime soon, and businesses need to prepare to weather the challenges ahead.
Whether your company works remotely, in the office, or has a hybrid work environment, your employees will need reliable and updated managed communication and collaboration equipment to keep up with their daily operations. CTI Technology can help mitigate the effects of the global chip shortage on your Chicago business. We provide comprehensive IT services ranging from IT service and support, server maintenance, cloud solutions, Voice over IP, fractional CIO/CTO, and cybersecurity.
We will guide you through the chip shortage, ensuring that your business has the technology it needs to keep your employees connected, productive, and moving forward. We can conduct a strategic review of your current hardware to determine what you need, help you migrate to the cloud to lessen your dependence on hardware, and ensure your network is secure from cybersecurity threats. With our IT services, you can ensure that your business technology is continually available, secure, and fully supported. Contact us today to discover how CTI Technology can help your business stay ahead of the global chip shortage.