By Thomas Kwan
The chip shortage is an impact felt worldwide, with experts believing the aftermath will lead to increased prices of electronic goods, such as the PS5.
In America and across the globe, the chip shortage, supply chain issues, and lack of silicon have caused an increase in the prices of numerous electronic goods since the Q4 of 2021, according to Wall Street Journal. Most gamers expect prices of video games and consoles to be MSRP or discounted over time, as history has shown, although this may change soon.
Why Is There A Chip Shortage?
The pandemic disrupted not only the lives of everyday people, but the supply chains we depend on to function as a modern society. According to Jabil, the supply chain has been hit hard by the pandemic, from factory shutdowns due to covid-19 and quarantines putting production on hold. As a result, a lack of supply with an ever-increasing demand overshadows it.
Components worldwide became harder to source, causing major supply chain bottlenecks, according to Jabit.com. Although this market heavily depends on much-needed components such as the highly sought semiconductor. Many industries’ products, such as the automotive’s Electronic Control Unit (ECU), devices like Smart TVs or iPhones, and various smart-household appliances, use these same materials. The market is already feeling the impact due to the lack of components.
Rise In Demand, Rise In Cost
According to market data provided by Jabil, the semiconductor market expects to be low in supply and high and demand throughout 2023, or possibly longer. While the pandemic may have caused a decrease in production, a recent shot in growth and demand occurred recently. The supply chain is tight, operating at max capacity, with demand never being this high and the writing on the wall pointing to a bleak future. With the semiconductor industry expected to grow 10% during last year, a $50 billion increase, putting strain on the market along with the high demand and implementation of 5g wireless, demand is growing from one rapid succession to another.
Cost of System On A Chip (SoC)’s of mobile phones increased last year, due to the shortage and demand, in 2021, according to the Android Authority. The automotive industry lost an estimated $60 Billion in 2021 due to the lack of chips to go into their vehicles. Playstation 5 was experts predicted the console to outsell the Xbox, but the chip advantage Microsoft got, along with the chip shortage itself, has caused Playstation to fall on hard times. Experts expect the Playstation to become pricier later this year, so now is the time to buy if you plan on getting one.
Full-Capacity, Fewer Chips
Even though TSMC possesses 28% of the world’s manufacturing capacity, making it the world’s largest producer of computer chips is experiencing ongoing shortages and is at capacity. Other electronics manufacturers, such as Texas Instruments and Intel, are feeling the brunt of this shortage, with experts at Intel believing it to last until 2024.
In June 2021, the U.S. Senate passed the CHIPS Act, which funded $52 billion to semiconductor manufacturers residing in America, according to Jabil. Additionally, the European Union created a “Chips Act” of their own, increasing chip production across Europe. South Korea even funded a staggering $450 Billion toward their semiconductor industries, with the Japanese agreements between TSMC and Sony with plans to open a fabrication facility by 2024. However, these facilities aren’t expected to be up and running til at least 2023.
With the chip shortage expected to last until at least 2024, and the ever-increasing demand, prices will potentially keep climbing until the supply chain issues cease or demand starts to fall.