Not Enough Chips
The world is currently facing a shortage of chips. Don’t panic — there is no need to rush to the grocery store and load up on your favorite snacks. The chips I’m talking about are microchips used in electronics like computers, video game consoles, and cars.
As technology advances and plays an increasingly important role in our lives, demand for the semiconductor chips that power our favorite technology increases. The pandemic caused a massive surge in demand for computers and devices used to learn or work from home. Gartner data stated PC sales grew 4.8% in 2020, with over 10% growth during the holiday season, marking the market’s highest annual growth since 2010. Now, semiconductor chips are expected to be in short supply in the coming months due to this sudden increase in demand, and businesses are feeling the consequences.
Companies from automakers to video game console developers are hurting due to the chip shortage. Automakers Chrysler, Ford, and Honda have all been forced to cut production because of the chip shortage. On Tuesday, General Motors said the company is extending production cuts in North America until mid-March. While a tiny, $8 chip may seem innocuous, if that chip is missing from a car, the car can’t be sold. Sony is also facing the repercussions of the chip shortage, saying the shortage is why their new PlayStation 5 is so hard to acquire.
It’ll be interesting to see how businesses continue to be affected by the chip shortage and if they’ll come up with any creative solutions.
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.