How does the global chip shortage affect your business?

A global pandemic and increasing demand for automation sounds like the perfect mix for electronic companies to make millions in profit these years, right? Well, not quite. But not for the reason you’d think. It turns out that more demand for electronic devices translates into a global chip shortage, which the industry is still trying to sort out.

Let’s go over what is the global chip shortage

Back in 2018, when remote work was just starting to become a thing, the market for laptops, servers, and other electronic devices started to grow slowly. Then, when the Covid-19 pandemic hit and remote work became the rule, it was only a matter of time before the already high demand for semiconductors increased. 

Semiconductors, commonly known as chips, are small electronic pieces that power the functions of many digital products, from phones to cars, and yes, that includes laptops, desktops, and other components we were forced to get in order to settle a proper office in our homes.

Chips sales grew up 6.5% only in 2020 and this number quickly increased by 2021, up to 26% according to the Semiconductor Industry Association. Factories, mostly located in China, South Korea, and Taiwan, were already operating at full capacity, so this new demand left a space in the market for other chip companies to fill. The only problem is that even chips and products made in the U.S. would have to be assembled overseas, making them even more expensive. 

How does chip shortage affect the general economy?

Chips are used in at least 80% of the devices we own, so it is not surprising how this demand became a problem for semiconductor manufacturers and has created a gap in the economy. However, this is not the end of the digital world. 

On the contrary, it only means more business in the long run. If factories and chip companies manage to increase their production to meet the world’s needs, the global chip shortage we face today would gradually decrease and the whole market will have grown in a couple of years. 

But meanwhile, the chip shortage has caused a supply chain bottleneck for chip-reliant companies. Car production and video game companies, such as Ford and Playstation have reported a delay in their production schedule due to chip shortage, and many more are facing similar challenges.

But, how does this affect your business?

If your company had to rely on remote operation teams since the pandemic, or you run a fully remote business, you can imagine how this chip shortage might affect your business.

Overall, onboarding processes and more or less needed technological upgrades would become more expensive as the chip shortage continues. And if you work in an area closely related to this topic, consequences can be even greater in the short term, so you’ll have to evaluate this situation in the future. 

According to Daniel Dusina, director of investment at Blue Chip Partners Inc., and member of the CFA Society of Detroit, the chip shortage forecasts economic expansion as the rising demand for electronics and other products will also indicate a higher consumer spending in other industries. 

Global chip shortage has turned semiconductors into an indicator of economic growth in the world and it can be taken advantage of for companies within related areas. As the demand for graphic designers, website developers, and content creators, and the interest in cryptocurrency increases, the ground is prepared for online businesses to succeed once semiconductor companies get back on track.