The chips are still down

By Scoop
July 21, 2022 · less than 3 min read

There’s a global chip shortage, and it’s gonna bite.  

Materials matter

There’s a big old chip shortage across the globe. No, we’re not talking Pringles or Doritos, but electronic semiconductors. With the Russia-Ukraine conflict raging on, the chip shortage means its crunch time for manufacturers. The supply chain is taking a hit, and it’s no laughing matter.

Chips are used in most of the electronic devices that make up our homes, mobile phones, or automobiles. But we could soon be seeing further impacts of the ongoing conflict in Eastern Europe. Russia and Ukraine capture a huge part of the market share for semiconductors, with both exporting vast quantities of an important gas used in production, called krypton. So, the savvy economists among you will know your supply and demand axis. When supply goes down, and demand remains even moderately stable, what happens? That’s right – prices go up.

Packing a crunch

Of course, the Russia-Ukraine conflict has been raging for some time now, meaning the chip shortage isn’t exactly new news. But think about this: Neon, is another component that is critical for the chipmaking process. More than half of the world’s neon is produced by a handful of companies in Ukraine. You do the math.

So, what will this mean for you? The bottom line, according to International Data Corporation’s Asia-Pacific research director Vinay Gupta, is that “the average selling price of the devices are going to rise, and the infrastructure vendors would be then passing it down to the customers.” So, look after your tech products – with inflation also exploding, it might be a shock to the system the next time you head to BestBuy.  

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