Chip Conundrum
One major effect the COVID-19 pandemic has had on the global economy is the worldwide chip shortage. In the current world, millions of products rely on chips, which are also referred to as semiconductors. You obviously have technology devices like phones, computers, and tablets, appliances such as dishwashers, and chips are also necessary for cars. Back in February of 2020, there was a high risk of a semiconductor shortage, and the pandemic shutting down global economies created major supply chain disruptions at a time where demand is high for products that require chips. The chip shortage has affected companies like Apple and GM, and they’ve mentioned it in earnings reports.
On Thursday, it was announced that TSMC, or Taiwan Semiconductor Manufacturing Company, would increase its chip prices by as much as 20 percent, which is a major move for the world’s largest chip maker. This could possibly increase the amount of money consumers pay for electronics, and it would lead to more costs for companies buying their chips. Apple has not determined their paying price, but they are likely to pay extra as demand for Apple products is sky high. In the short term, TSMC can preserve supply to its neediest customers who are willing to pay the price, and this will show in the long term with higher income for the company. In fact, analysts expect the move to increase TSMC’s revenue by up to 15 percent, and earnings by up to 30 percent. Do you think this was a good move?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
