In recent months, there has been a serious shortage of Semiconductors, and it is becoming an alarming issue. Semiconductors are fundamental components that make up the Micro-chips. Hence, they play an integral role in making everything from computers to smartphones run. In addition to offering hardware support, Semiconductors are used across a wide spectrum of industrial sectors as well from Renewable Energy to Military.

The Automotive sector has been the worst hit off-late, in an era where micro-chips form the backbone of most cars. All the big Car manufacturers are suffering due to the shortage in supply. The news of Tesla shutting down the production of Model-3 for 2 weeks for instance, only reflects the seriousness of the situation. Even experienced tech giants Microsoft and Nvidia are struggling to provide a steady flow of graphic cards.

The Root Problems

While it is easy to blame everything on the Coronavirus Pandemic, signs of the shortcomings of global semiconductors supply chains had been coming for a long time. More than 70 percent of the global Semiconductors are made by two companies – Taiwan Semiconductor (TSMC) and Samsung. The problem is that the global standards to enter into the semiconductor arena are quite high. Besides the specialized expertise, investments required to enter into the Semiconductor manufacturing field can go up to billions.

The Pandemic of-course created a monumental demand for Laptops, Gaming consoles and PCs, as millions of the global workforce started working from home and people started seeking more options of indoor entertainment.

However, the final nail in the coffin was the surging rise in Bitcoin prices. This generated a huge demand for graphic processing units that are used to mine digital currencies – exaggerating the Semiconductor supply issues further. All of a sudden, TSMC and Samsung are unable to take the load of the demands and fulfill order requirements. As a result of this there is a huge drought in the global supply of Semiconductors.

The Bottom Line

As a result of the drought, prices of consumer electronics have sky-rocketed. To match the high-demand and low supply of the components tech manufacturing outlets and retailers will be forced to increase the prices of consumer electronics even further. Expect to see more expensive variants of existing electronic products to hit the market soon. At the end of the day, the end consumers will be forced to buy overprized products with quality getting significantly worse-off.