The pandemic of 2020 struck the world hard. There was a major production shortage as a result of global immobility.
However, almost no industry was struck quite as hard as the computer chip industry. Everyone from medical staff to game console producers felt this shortage. Computer chip companies are scrambling to meet these demands, but are still falling short.
As a result, the global tech industry lost significant production and revenue. Cellphone providers report losses of up to $6 billion as a result.
The United States government is scrambling to meet the need. But, what do they plan to do?
Keep reading and we will find out!
Why Is There a Computer Chip Shortage?
In 2021 the world saw the biggest computer chip shortage it had in years. The computer chip shortage brought several unforeseen issues in the tech industry. As the world was shifting from 4G to 5G, the world faced the reality of being unable to meet the new technological needs.
This shortage affects many computer chip producers across the country. Companies such as Intel and lenovo.com produce these chips. These chips are used in everyday devices and advanced system technologies.
Some of the primary factors contributing to the computer chip shortage include:
- The Covid-19 pandemic
- Increase demand
- Miscalculation of production
- Tech companies stockpiling chips
- Natural disasters in Texas
The computer chip shortage really began because of the global pandemic of 2020. After the world seemed to shut down, many tech companies changed their demand for chips. In light of the threat of a global shutdown, many in the tech industry feared a drop in sales.
However, the exact opposite happened. Rather than the tech industry losing revenue, sales began to skyrocket.
Many tech companies such as computer companies and video game console creators saw a stark increase in sales. This may come as a small surprise to those of us who were trapped inside, unable to do much else.
The reality was, the world was desperate to keep in touch and find some way to get through the lockdowns. Many companies switched to an at-home system and needed to provide laptops and computers to their workers. Zoom and online meetings became more and more prevalent, requiring higher performance systems.
The combination of increasing demand, loss of workforce, and underestimating need to a computer chip shortage. But, just how important was this shortage and how important are computer chips every day?
Why Are Computer Chips Important?
Computer chips are in a vast variety of everyday appliances and electronics. These electronics include things such as computers/laptops and cellphones and automobiles. Without computer chips, these devices cannot function nor can they continue to be updated.
To put the loss in terms of numbers, Samsung and Apple estimate a loss in sales in the billions of dollars. Apple reports that the inability to produce iPads and iPhones cost them $3-$4 billion in losses. And, this was all because the industry could not keep up with demands.
Other industries that use computer chips include automobile and industrial vehicle manufacturers. Automobiles use computer technology to activate many of their systems.
Car manufacturers such as Ford reports they will likely produce over a million fewer cars. Unwilling to sacrifice function and quality for demand, this hit the world hard.
The cost of used and brand new cars increased notably throughout 2020 and 2021. Without the capacity to increase production, however, there was little else that could be done. People needed to bite the bullet and pay the hiked-up prices.
What Devices Use Computer Chips?
The modern question is, what doesn’t use a computer chip? In today’s world, computer technology infiltrates everything from your phone to your fridge. That’s right, there are even smart refrigerators that use computer technology to track your food use.
But, this is not the industry most impacted by the computer chip shortage. The general statement is, the computer industry was most heavily hit by the computer chip shortage. But, your phone is a computer.
Your video game console is a computer. This means that computer chips are used to make each of your devices function. Without the computer chip in your phone, you can’t access wifi and 5G service.
This means that while you’re on the road, you can’t use your GPS to navigate. You can’t google where to eat or upload your most recent Tik-Tok video. Perhaps we do not think of these factors, but computer chips are the things that make our lifestyle possible.
What Countries Make Computer Chips?
Computer chips are mostly manufactured in Asian countries, the USA, and the Netherlands. The Asian nations taking the spotlight in production and innovation include Japan and China. However, closely trailing these nations in production are South Korea and Taiwan.
The United States shifted production from domestic production to international production in the late 90s. As a result, United States production decreased significantly by 2010 and made it heavily dependent on Asian manufacturing.
However, with the new loss of computer chip production, the United States will need to start producing again. In the new massive spending bill, billions of dollars have been designated for building new chip manufacturing facilities.
These facilities cost tens of millions of dollars to develop and run. So, a helping hand from the government will hopefully help bridge this gap.
How Did Microchips Change Society?
Microchips are computers on a microscopic level. These chips power systems we use every day without us even being able to see them.
Back some 50 years ago when these chips became a reality, it was estimated they would increase production and minimize every two years. Up until recently, this estimation was proven true.
Why is minimization so important, though? These chips are used in airplanes and space exploration. Satellites rely on these microchips to operate and prevent damage to the chips because of their size.
But, in the medical field is where we feel the impact the heaviest. This is because for many people microchips saved their lives. One of the most notable ways these chips save lives is with pacemakers.
Pacemakers use this nanotechnology to insert devices into the human body. These systems help to monitor and regulate the heart rate and pace. For people with heart arrhythmia, these devices help save their lives every day.
These microchips continue to improve the medical field and how we approach health. These chips are also used in scanners and medical examination tools. Such as ultrasound technology and other high-resolution scanning devices.
The United States Investments and 5G
The next big change coming to the world was the introduction of 5G. 5G, without getting too technical, is the fifth generation wifi technology. With the coming of this system, the world of cellphones and computer running speeds changed.
The United States began its investment in this system back in the early days of computers. This is one of the goals of the new infrastructure bill. The United States government under the Biden administration invested vast amounts in advancing technology.
5G technology requires higher-tech devices to operate on this system. The computer chip shortage impacted this shift significantly. Without the proper software, 5G is not very useful.
With the billions proposed for computer chip production, the U.S. may bring back this industry. If the United States is successful at bringing this production back, it may be able to change the tide. The Biden administration hopes that the infrastructure bill will lead to job creation.
But, they also hope to ensure a more stable source of computer chips. Accordingly, they claim this is the best way to ensure future success with technological advancement.
AI and Self Driving Cars
We have all heard of Tesla and its push for AI technology in cars. For many people, AI seems to be the answer to many issues facing the transportation sector.
Even though it is controversial, many claim these automobiles are much safer. Without the margin for human error, these cars seem much safer than traditional driving. Additionally, they may help meet the needs of the shipping industry.
According to recent estimates, there is a semi-truck operator shortage in the U.S. This shortage is conservatively estimated to be at 80,000 as of 2021. This means the United States lacks a significant number of workers for shipments.
Without the adequate staff to meet the needs of shipping companies, there are delays. Delays primarily in the production cycle of numerous products across the land. One of the major hopes of the technological giants is that AI and automatic trucks can help meet this need.
How Computer Chip Companies Are Solving the Shortage
Having a computer chip shortage sounds like a small issue at first. Many of us take for granted the many devices we use every day that have computer chips.
This shortage does not just impact gamers. It impacts pilots and doctors as well.
And, it ultimately impacts you every day. Computer chip companies are working hard to increase production.
With the hope of a return to the United States, at least shipping will decrease. However, the issue is not going to be solved overnight.
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