Global Computer Chip Shortages Hitting Local Businesses
If you have tried to buy a new personal computer, laptop or gaming product in the past months, you probably have come across several out-of-stock listings from your local store or on eBay, Amazon and other eCommerce retailers. Well, this is due to a biting global computer chip shortage causing significant headaches for US manufacturers and raising costs related to computer technology. Let us look at everything you need to know about computer chip shortage and how it can impact your business.
What Is Causing Computer Chip Shortages?
Undeniably, the COVID-19 pandemic triggered unprecedented disruption of supply chains and manufacturing across the planet. Manufacturers of computer chips in Asia were particularly hard hit. Notably, factories where chips are made experienced personnel shortages and closures dues to the pandemic making the supplies needed for chip manufacturing unavailable for months.
Additionally, as more people stayed home, demand for consumer electronics shot up, causing shifts that destabilized the supply chain. Orders began to pile even as manufacturers struggled to make enough chips to meet new levels of demand. As expected, a massive backlog began to grow, which in turn has driven up the prices of new computers and other electronics. Experts reveal the chip shortage will likely last at least two years, with normalcy expected to return not before the first half of 2023.
Why Are Computer Chips so Important?
Computer chips or semiconductors are typically the brains of several electronic products. They are an integral component of every machine, including computers, cars, internet cables and more. Made from a conductive material, usually silicon, the computer chips enables advances in communications, computing, military systems, and countless other applications. Common types of chips include:
- Memory chips: These chips store data. They are relatively simple and are now commoditized.
- Logic chips: These chips typically run programs and acts as the brains of a device. They are quite complex and expensive and often bear brand names such as Apple, Qualcomm or Nvidia. Notably, these brands are just the designers of computer chips. The real manufacturing process takes place in factories called foundries, primarily found in East Asia.
Why Can’t More Manufacturers Set up Manufacturing Plants?
The US produces only 12% of the world’s computer chip supply, with 75 % of the world’s supply coming from Asia. Manufacturing computer chips is a high-volume enterprise that needs massive resources, skills and incredible precision. Plants gobble up billions to build and equip and must run 24/7 to recoup investments. But more importantly, a foundry needs massive amounts of water and electricity and is more susceptible to even the smallest of disruptions, from dust particles to distant earthquakes.
The US relies heavily on outsourcing chip-making since it’s cheaper and easier to manufacture overseas. However, with the current global chip shortage, the US government is now mulling setting up more domestic chip production plants to ramp up supply.
How Global Computer Chip Shortages Is Impacting Local Businesses
The severity of the global chip shortage that seems to worsen with each passing day is now impacting several local businesses and millions of people in the USA. The following are some of the immediate effects of the shortages:
- Price increases: TSMC, the largest chipmaker globally, reveals it will raise the prices of the advanced chips by about 10 percent and the less advanced ones by about 20 percent. TSMC manufactures processors used by AMD, Apple, Qualcomm, Nvidia, and some Intel products. Raising the prices in what was typically integral and expensive components in a range of domestic devices means the prices for some of the most popular devices such as phones, laptops, PC, gaming products, and more will increase substantially. A substantial increase in prices of computing devices will ultimately impact budgets, meaning most local businesses that rely on computing technology to run their operations will have to carry added costs of acquiring modern office equipment.
- Delays in order fulfillment: As the global shortage continues, lead times or the length of time it takes to fill product and service orders are extending. Currently, the lead time to order for a chip is estimated to be over 20 weeks compared to 12 week lead time in February 2020 before the COVID-19 became a global pandemic. Local businesses are already having challenges keeping a healthy inventory of office essentials such as laptops, printers, desktop computers servers and display monitors.
- Impacts on operations: Businesses that need new computer hardware will find it challenging to secure modern office tech in 2021. Relying on legacy systems and computers with outdated technology ultimately leads to a higher risk of inefficiency, security issues, higher maintenance costs and low productivity.
Why It Makes Sense to Outsource Your Business, IT Support Now
As the shortage of computer chips continues, modern computer and networking parts are becoming harder to come by. The available computer products have seen their prices more than double due to low supply. If you are a business that relies on computer technology to operate, now is the best time to outsource your computer needs to a reliable Managed IT Service Provider. Relying on outdated computer equipment and legacy systems doesn’t only lead to inefficiencies, but it also exposes your organization to threats such as malware. The following are some of the benefits that come with outsourcing your computer needs:
- Reduced costs: With outsourced IT services, you don’t need to invest in costly computer equipment and systems. You only pay a fixed monthly or per-user fee to an IT outsourcing company that will care for all your computer needs.
- Comprehensive services: When small businesses outsource their IT needs, they benefit from several services at lower costs. An MSP’s services include real-time monitoring of systems and networks, remote support, proactive support, scheduled maintenance, and more.
- Focus on core business: The best IT support for your business from a reliable MSP helps you focus on your core business. The MPS typically handles critical IT functions so your team can have more time on revenue-generating activities and innovation.
- Reliable security: Outsourcing IT needs is also a smart way to protect your business against the rising risks of cyberattacks. MSPs have better resources and skills to protect and respond to evolving threats.
Outsource Your Business IT Needs to Essential Solutions Today
Cushion your business from the impact of the global chip shortages with a managed IT support service from Essential solutions. We provide a range of high-quality managed IT support services that ensure access to quality technology without having to spend on expensive computing devices. Our experts are committed to delivering all or some of the IT functions your business requires, including managing IT infrastructure, running the support desk, monitoring and reporting, data backup strategy and more. Contact us today to learn more.
Essential Solutions, LLC is an IT company that relies on its strengths: customer satisfaction, quality service, and the fulfillment of our clients’ needs. Let us put our experience and expertise to work for you. Our IT solutions are an essential part of your success.
- 1 Global Computer Chip Shortages Hitting Local Businesses
- 1.1 What Is Causing Computer Chip Shortages?
- 1.2 Why Are Computer Chips so Important?
- 1.3 Why Can’t More Manufacturers Set up Manufacturing Plants?
- 1.4 How Global Computer Chip Shortages Is Impacting Local Businesses
- 1.5 Why It Makes Sense to Outsource Your Business, IT Support Now
- 1.6 Outsource Your Business IT Needs to Essential Solutions Today