Shortage of chips may lead price hike of electronic items, the experts say.
The shortage of semiconductor chips around the world is hitting the world economy. The supply of everything from cars to headphones which uses electronic devices has been affected.
Chips are the basic building blocks of a computer that allow electronic devices to process data.
Following the outbreak of COVID 19, in early 2020, the pressure on electronic goods increased – additional monitors began to be used. People rushed to establish work-from-home offices, online classes, television and game consoles to alleviate lockdown boredom.
On the other hand, the production of chips decreased. The epidemic also temporarily shut down factories, putting pressure on supplies.
As factories reopened, electronics makers began placing large orders. The crisis was exacerbated by the storm, which shut down production at several Texas plants in February. In addition, a fire broke out in a Japanese factory in March.
This has affected the production and supply of cars, mobile phones and all other electronic devices.
Two months back South Korea announced an investment of 451 billion to build a semiconductor company. The US Senate last month approved a 52 billion subsidy for chip plants.
The European Union is aiming to double its share of global chip manufacturing to 20% of the market by 2030.
But factories can’t open overnight – making semiconductors is a delicate process that involves pressing chemical layers into silicon.
The available capacity will not be increased till 2023.
Long-term factors – global demand is in “hyper-growth”, with companies moving toward storing their data in the cloud, and the need to build more data centers.
The shortfall is expected to last “at least next year”.
Experts believe this will lead to higher prices for consumers. (Monitoring Desk)