Global Computer Chip Shortages Hit Maryland Businesses
The computer industry is facing one of its greatest challenges in recent years, a global computer chip shortage. Unfortunately, there does not appear to be an end in sight very soon. Predictions have been made that it could be a year or two before the supply can keep up with the high demand.
There are chips in practically everything electric you own, from your phone to your car. There are even chips in things you have that you would not expect, such as your washing machine, gaming systems, and refrigerator. These tiny pieces pack so much power, but they are now in critically short supply.
New and used car prices are on the rise in Maryland. Nissan, General Motors, and other car manufacturers have produced fewer vehicles and had to halt some of their production due to a shortage in computer chips. In July, Tim Cook, CEO of Apple, stated that chip shortages would affect sales of its phones and iPads.
What Are These Computer Chips?
The chips, also known as semiconductors or microchips, serve as the brains or heartbeat of our electronics. They are tiny technological wonders, but these chips are packed with billions of transistors. The transistors can be compared to a gate, making the decision to allow electrons to pass through them or not allowing them to pass through.
The number of manufacturers currently creating these chips has declined severely. Only a few companies are able to make these chips. The foundries are largely expensive to set up and orders for these chips have to be placed in advance. The COVID-19 pandemic, natural disasters, political tensions, etc. all have had an impact on the global chip supply chain.
TSMC is the world’s largest chipmaker, and it is the organization responsible for manufacturing the processors used by AMD, Apple, Qualcomm, Nvidia, and some Intel products. However, TSMC’s products are getting more expensive every day due to the global computer chip shortage. TSMC has plans to increase the prices of its advanced chips by about 10 percent. The price of less advanced chips will be raised by about 20 percent.
Why Is There A Chip Shortage?
As the world was turned upside down because of the COVID-19 pandemic, many factories were shut down, leading to chip manufacturers being unable to meet supply demands for months. During that time, the demand for consumer electronics led to a ripple effect throughout the supply chain. More and more orders were being made, and the orders began to pile up as manufacturers found it difficult to create enough chips that would meet the new levels of demand. Unfortunately, the backlog created by the shortage began to swell.
Companies have to make predictions on the number of chips that need to be produced and order them in advance from one of a handful of chip manufacturers. It could take up to six months for a chip order to come in. The demand for chips is so high that manufacturers are unable to make enough chips to meet the demand at this time. What will this mean for consumers? This means consumers will soon see higher prices for fewer goods. Many parts of the manufacturing and transportation supply chains do not have the capacity to handle this backlog, pushing the supply chain deeper into further crisis.
How Will The Chip Shortage Impact Maryland Companies?
Many businesses typically order multiple computers and other devices a few weeks before hiring new employees or replacing outdated equipment. With chip manufacturer lead times spanning into several months, Maryland companies have to project their needs out to ensure new hires have the equipment they need to start work and that existing employees have the new computers and devices they need to replace the old ones.
Placing orders for new equipment for new employees, replacing malfunctioning and outdated equipment, and supporting end-of-life IT needs have become burdensome. If a company has several clients or customers in need of new equipment and there are shipping lags in technology shipping, it can have an increasingly negative impact on those clients and customers. When employees are not equipped with the technology they need to fulfill their daily responsibilities, projects may be delayed or projects will be ended completely.
Companies may also need to increase their IT budgets to accommodate the rising prices during this low-supply period. IT teams may also need to widen their preferences of manufacturers to meet the growing business needs. However, we understand that when you factor in more manufacturers in the equation, more challenges will arise, but it may be something that more companies will choose to do as a decision has to be made between rapid productivity and support in the future.
The shortage even has an impact on businesses that are not directly associated with computer chips. One of the questions that businesses will need to have the answer to is how will business technology be used? The use of business technology will determine a variety of things, such as storage and power. However, the computer chip shortage has led to businesses having to adapt to whatever is available for the time being.
How Can Your Maryland Business Meet Your Needs During The Shortage?
Even before the COVID-19 pandemic, the demand for computer chips was growing rapidly, especially as more advanced and sophisticated technologies have become even more integrated into our world. One of the viable solutions is to increase semiconductor production.
Ordering the right business technology can be a challenge during these times. Under existing conditions, many businesses do not have time to wait for productivity to increase and for warehouses to be reloaded. Businesses can either monitor the availability of their technological needs during this shortage or be adaptable to the manufacturers’ availability.
Advantage Industries advises clients on the best way to navigate these issues and helps clients take the best actions so they will not have to make last-minute decisions, whether it relates to computer equipment or other IT-related services. Are you prepared to navigate the chip shortage and avoid a technology shortage in your business? Contact Advantage Industries today to schedule your consultation.