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PSA: The 2021 chip shortage could affect you (Update: Biden commits to help)
- Around the world, there’s a major chip shortage. It is making business very difficult for automakers, in particular.
- The shortage has to do with a variety of factors, not the least of which is the ongoing pandemic.
- It’s possible this shortage could have an effect on tech products you plan to buy this year.
Update, February 11, 2021 (02:00 PM ET): Today, a White House official speaking on behalf of the Biden administration committed to helping alleviate problems related to the chip shortage discussed in the original article below (via Bloomberg). Biden will apparently sign an executive order that will allow for a supply chain review. He has also committed to developing a long-term strategy to avoid future shortages.
Original article, February 5, 2021 (11:12 AM ET): If you have budgeted out some cash to make a big tech purchase this year, we have some news that could be important. According to an article from The BBC, we are in the midst of a major global chip shortage.
This shortage could have an effect on all sorts of different markets. In fact, automakers are facing the most problems in response to the shortage. The average automobile will often have more than 100 microprocessors running everything from the stereo to the lights. Automakers are struggling to get those chips, which is delaying rollouts.
For the general tech we most often cover here at Android Authority — smartphones, tablets, laptops, smartwatches, etc. — things are less dire. However, that doesn’t mean the shortage won’t cause issues later in the year.
2021 chip shortage: What’s happening and why?
According to The BBC, this shortage is essentially a perfect storm of various problems. Obviously, the ongoing COVID-19 pandemic plays a major part. But there are two other issues that, when combined, are causing the industry to buckle.
The first problem is the sharp rise in new high-demand products from 2020 that depend on 7nm silicon. One of the reasons the Xbox Series X/S, PlayStation 5, new NVIDIA GPUs, etc., are so difficult to get is because there just aren’t enough chips to get them off the line.
The second problem relates directly to the auto industry. In 2020, automobile sales took a big drop and, in response, carmakers cut their silicon orders. However, demand for cars suddenly skyrocketed towards the end of the year, causing those same automakers to then place rush orders for new chips.
When you add those two issues to the COVID-19 pandemic, you get the great chip shortage of 2021.
Does this mean it will be difficult to get phones?
As of right now, no. The two big players in the smartphone world — Samsung and Apple — are focused on 5nm chips at the moment. These chips don’t appear to be in as much of a crunch as other builds. In addition, Samsung is the world’s largest semiconductor creator, so it will obviously prioritize its own products.
However, smaller players in the market could face issues related to the chip shortage. This could result in lower-than-expected quantities of phones when they first launch. It could also result in higher pricing because smartphone OEMs would want to increase revenue to combat the expected drop in unit shifting. This is speculation, though. There’s no indication that getting the latest smartphone will be as tricky as it is to get a PlayStation 5, for example.
The important thing to keep in mind, for now, is that this chip shortage is happening and could have an effect on buyers as the months go on. If you are planning on making a big tech purchase this year, you’ll want to keep your eyes on this problem as it continues to gestate.