Global Chip Shortages Impact Canadian Companies

written by Michael Anderson posted on September 27, 2021

Canada and many other countries around the world have experienced a wide variety of unexpected product shortages over the past year and a half, and the technology field is no exception. Semiconductor chips, which are a crucial part of laptops, cell phones, vehicles, and a wide variety of other types of tech products, have been difficult for their manufacturers to create enough of to keep up with the current demand after an abrupt pause in production last spring. This shortage means that tech consumers will likely find that the products they want are more difficult to find and more expensive than they might expect them to be in the coming months.

Whether you or your business are considering continuing to use older products for the time being even though they are reaching the age where you might experience more IT problems or you are ready for an upgrade although circumstances may not be ideal, we are here to help with any setup or maintenance needs you may encounter with your new or older tech products.

What Caused the Global Chip Shortage?

The global chip shortage is mostly considered to be a result of the COVID-19 pandemic, but its overall origins are somewhat more complex. Although the anticipated decrease in demand for new products at the beginning of the pandemic and the resulting rapid decrease in the number of semiconductor chips that were made were major contributing factors to what became a much larger problem than expected, the trade war between China and the United States and recent drought conditions in Taiwan are also considered to have made significant contributions to the overall shortage.

Many chip factories closed at the beginning of the pandemic, much like other businesses, and many have not caught back up to normal production levels yet. Factories closed for similar reasons to other companies, as well as because a temporary decrease in demand for products was expected.

Because the same type of chip is used to make a wide variety of tech products, many types of products have been affected by the shortage and people who are in the market to purchase them can expect to experience the effects of supply and demand. TSMC, the world’s largest semiconductor chip manufacturer, supplies chips to Apple, Qualcomm, Intel, and a wide variety of other major tech companies, which means that consumers who are looking to purchase new tech products will likely struggle to find a reputable company that has not been affected.

Effects of the Global Chip Shortage

The global chip shortage has made certain types of products more difficult to find when consumers want them. Many of these products are becoming more expensive as more consumers are looking to purchase them while tech manufacturers are still working with a limited supply of crucial parts.

Shortage of Tech Products

Because these chips are an essential element of many types of tech products, the global chip shortage has caused a shortage of certain types of tech products that is likely to continue for quite some time. This issue was first noticed when the chip shortage led to several types of new cars not being made, which caused problems as early as the summer of 2020. Rental cars quickly became extremely difficult to find, particularly in popular tourist destinations, as many major car manufacturers abruptly stopped making new vehicles.

Increase in Prices

The concept of supply and demand means that prices of most types of products that utilize semiconductors have either already increased over the past year or are likely to do so in the near future. This pattern occurred in the case of rental cars, as many renters quickly increased their prices to control the demand for vehicles as travellers eventually began visiting tourist destinations again later in the summer of 2020. After a spring and early summer of very few tourists, many rental prices were lower than usual in an effort to entice more people to start travelling again.

Although a lower demand for new cars had initially been predicted at the beginning of the summer, the rapid increase in demand for vehicles when few chips were available to make more led many renters to inflate their prices far beyond what would typically be considered acceptable. While this was partly an attempt to lower the demand, renters also inflated their prices simply because people were willing to pay previously unreasonable amounts.

Because many types of tech products utilize the same type of semiconductor or one that is very similar, the same sort of increase in prices of these tech products is anticipated in the coming months. The demand for new laptops, phones, and other types of tech products has been relatively slow over the past year aside from the initial need for new computers when a large percentage of the population shifted to working and learning from home, but it is beginning to pick up as life is beginning to return to normal, many major tech companies are releasing the latest versions of their products, and the holiday season is not far away.

Although tech products have been steadily increasing in price for years, the global chip shortage is predicted to lead to a 10-20 percent jump in prices within a short amount of time. For many tech companies, this chip is already one of the most expensive parts of their products, and most manufacturers have been forced to increase the cost of their products to compensate for having to spend more money to purchase the semiconductor chips they need to build their products.

The iPhone 13 series was just released, just under a year after the release of the iPhone 12 series, which means that products from this line are likely to be popular gifts this holiday season, especially among consumers that passed on the iPhone 12 because they did not want to spend money on a new phone earlier in the pandemic, although the global chip shortage is likely to have an impact on the prices of Apple’s new products.

At 365 Technologies, we are here to help business owners and other consumers in the Winnipeg area choose the best tech solutions for their needs and assist with any problems that may come up with their laptops, tablets, and other devices. If you are considering waiting to update your tech devices as a result of this increase in prices, we can help you make sure your older devices are running at the highest possible level to continue meeting the needs of your business until the global chip shortage improves. We can also help you set up new products if you choose to purchase them. Contact us today to learn more about the options you may have for best managing your tech needs until semiconductor chips become more readily available or with any other IT problems you may have!

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