Flea crisis, another factor that will make prices more expensive for 2-3 years
This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Contractor the contributors are theirs.
Due to the token shortage, this end of the year will be different for everyone in terms of shopping and giveaways, and more so if you are gifting or hoping to buy a gadget and even a recent car.
Now, it will be more expensive to acquire electronic items such as computers, smartphones, tablets and even cars not only due to the shortage of containers but also due to the shortage of microprocessors seen around the world. for months since the start of the pandemic. to be exact.
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According to the report Christmas in question , from the Business School of the University of Barcelona, one of the most difficult products to obtain for this end of the year will be video game consoles, which in many cases have already sold out since their launch.
The same report from the University of Barcelona reports that Apple has stopped producing 10 million fewer units of its most recent iPhone, the iPhone 13, due to the fact that in the past year the delivery time of the chips they need has increased. for its functionality.
The shortage of chips is a big blow to the digital economy, as these devices are necessary for the operation of the automotive industry as well as a variety of electronic items, which in turn are essential to a variety of industries for provide their services.
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Some factors that have a lot to do with the lack of microprocessors are:
Chip production drop due to restrictions due to current Covid-19 pandemic
Growing difficulty in producing microprocessors due to the environmental impact it generates, as well as the time it takes to produce them.
Imbalance between production and growing demand for these small devices. According to article data Concentration worsens shortage of crisps , the demand for microprocessors is increasing by 8% per year and production cannot keep up.
The production of microprocessors has been concentrated in a few manufacturers. Academic article data How did the global chip shortage come about? , indicate that 80% of the production of microprocessors is located in Asia, especially in Taiwan and South Korea. In Taiwan, the world’s largest manufacturer is TSMC, which stands for Taiwan Semiconductor Manufacturing Company. In South Korea, the largest chip producers are Samsung Electronics and SK Hynix Inc.
For their part, the United States only occupy 11% of the market, mainly through the company Intel, and Europe the remaining 9%.
Incidents in production plants. In the same article from the Jesuit University of Guadalajara, it is mentioned that the semiconductor plant of the Japanese company Renesas Electronics suffered a fire in March 2021, which severely affected car manufacturers such as Ford, General Motors , Toyota, Nissan or Continental, which are among the customers of Renesas. Production is barely normalizing.
The pandemic: the start of the chip crisis
In the academic article The Global Token Shortage, How Did We Get Here? , Roberto Martínez, coordinator of the Supply Chain Management specialty at the Jesuit University of Guadalajara, explains that at the start of the pandemic, the automotive industry anticipated a drop in sales, which is why it canceled its orders for microprocessors .
And on the other hand, the demand for computers, smartphones, tablets and the like has increased due to the home office, which is why the demand for chips for these devices has increased.
With the economy rebounding in the third quarter of 2020 and the vaccination, the auto industry has resumed its orders for microprocessors. So, given the high demand for chips by both technology companies and automotive companies, manufacturers are overwhelmed, which is why this crisis has been generated in the production of microprocessors.
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Who will pay the costs of the chip shortage?
As often happens when the products are more expensive, those who end up paying those prices are the consumers, who will be forced to buy at higher prices, not to buy for a while, or to buy second-hand, where the latter two options will affect profits. technology and automotive industry.
The costs of electronics using chips and the costs of new cars, which use up to 1,400 microprocessors, are expected to rise. As for electronic devices, in some cases there have been increases of up to 100%, while in new cars they reach 5%.
Automakers like General Motors and Ford have seen their profits drop: GM by over $ 1 billion and Ford by $ 2.5 billion. This type of loss will affect countries like Mexico, where there are several vehicle assembly plants.
Solutions to the lack of microprocessors.
Stabilization of chip production and, therefore, their waiting time, is expected to take place until the summer of 2022, although other experts in the field estimate that the chip shortage will last for a few more years, with which It will be regularized until the beginning of 2024.
In the meantime, solutions must be found to help mitigate the economic impact of this crisis, which is why Roberto Martínez proposes at least some actions to achieve this goal:
1. Map the current state of the supply chain.
2. Identify the most serious risks. In the case of the current shortage of crisps, the risk is the tiny number of suppliers of this product.
3. Look for alternatives to the risks detected. For example, one solution to the chip shortage is to find another supplier that is closer, even if the costs are higher.
4. Improve future sales forecasting with applied artificial intelligence to aid in exact microprocessor control.