Global chip shortage: more expensive cars and phones could come

In electronic devices, chips are the “brain” and the lack of these components has steadily worsened since last year. At first, the problem was only a temporary slippage in inventories when factories were shut down due to the coronavirus. After that, the factories restarted, but due to the changed habits, the demand continued to grow and the Guardian he has now reached a point of crisis.

The switch from car manufacturers to electric cars, increased demand for TVs and other home electronics during quarantine, the launch of new gaming consoles, and 5G-enabled mobile phones have also led to a further surge in demand.

And that Apple – the world’s largest chip buyer, spending $ 58 billion a year – has also been forced to postpone the launch of the new iPhone 12 for two months due to a lack of chips.

In addition, the Ford recently announced that it had canceled shifts at two of its plants and warned it could hit a $ 2.5 billion profit-strike due to a lack of chips, but General Motors also reported a similar, the company reports a $ 2 billion drop in profits.

Last month a Sony – which, along with other console manufacturers, has been unable to produce the right amount of consoles for demand for a year, said it was not expected to be able to meet the sales target set for PS5 due to a shortage of chips. In addition to Sony, the Microsoft Sickle Xbox also reported that manufacturing problems could continue until at least the second half of the year.

However, the most eloquent example of a chip crisis is Samsung, which is the second largest chip buyer in the world after Apple. The company said last week that it may have to postpone launching its new high-end phone due to a lack of chips,

and the company is also the world’s second-largest chip maker after TSMC.

The Samsung CEO pointed out that there is a serious imbalance in orders as to who gets the limited stocks. Automakers have found themselves at the end of the line in this regard, as the entire automotive industry buys nearly $ 37 billion worth of chips annually, with major players like Volkswagen or Toyota spending $ 4 billion, making them relatively small for suppliers, especially if let’s say we compare it to Apple, which spends $ 58 billion, or more, per year than the entire automotive industry.

It is not yet clear when the chip deficit can be solved 100 percent. It can take up to two years for plants capable of producing complex chips to be set up and production started, while manufacturers are preparing to raise prices significantly for the second time in a year.

There is no indication that supply will catch up with demand or that demand will fall as prices rise throughout the supply chain. This will get to the man on the street. The price of cars and phones can also be expected to rise. This year’s iPhone will not be cheaper than last year

Said Neil Campling, a media and technology analyst at Mirabaud.

Cover image: Getty Images

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