Chip Scarcity To Shoot Up Tech Prices; TV Segment Draws First Blood

| Published: Monday, May 17, 2021, 10:30 [IST]

Coronavirus pandemic crippled the world economy, bringing almost everything to a standstill; however, there's one area that witnessed a steady boom, and that's technology. To get rid of the lockdown blues, people turned to Netflix binging, worked together on Zoom calls, attended weddings over Skype, and whatnot. But this extra screen time also came with a new global problem - semiconductor shortage that is now causing a surge in tech prices.

According to market research firm NPD, the larger TV models have seen a 30 percent jump in pricing compared to last year. The surge is directly proportional to the ongoing semiconductor crisis, and it's just a matter of time this jump will be visible in other devices with similar circuitry - laptops, tablets, and VR devices.

Prices Hike Likely For Most Products

Some OEMs have already indicated a potential price hike. Taiwanese PC maker ASUS hinted that chip shortage would mean "price hikes further upstream," bound to affect buyers.

While the chip supply crunch has dented the semiconductor industry, another challenge awaits for devices with display-bound integrated circuits, which are generations behind the latest fabrication processes. With major chipmakers focusing heavily on scaling up advanced chip production, little investments are made towards older facilities. When the demand arises for these circuits, it will be impossible to meet the demand.

All types of devices have faced production issues due to the lack of semiconductors. Sony has already confirmed that the PlayStation 5 would face short supply until 2022 due to a chip crunch.

What Caused The Shortage?

Many factors came together to bolster this semiconductor drought. The pandemic shot up the demand for home electronic products, and the economic slowdown caused a misjudgment of demand by many industries.

As per IDC, computing systems are the biggest drivers of the semiconductor demand, closely followed by smartphones. The shortage has further been felt beyond consumer product supply. Many carmakers had to halt production and cancel pre-orders due to the shortage. Apple and Samsung have also felt the squeeze due to a lack of components. Geopolitical friction between China and the US is also considered a reason behind the issue.

Scarcity Could Last For Years

Well, the scarcity could last "a few years," IBM president Jim Whitehurst confirmed during an interview with the BBC. His quote aligns with the claims made by Intel and Nvidia, whose supply chains took a major hit due to the pandemic.

IBM recently took the wraps off the world's first 2nm chip, setting a new standard for chipmakers. While the incorporation of the latest chip could be distant, Whitehurst suggests that the semiconductor industry needs to find ways of extending the life of computing technologies to tackle chip shortages in the future.