Are we Finally Reaching the End of the Microchip Shortage?

The global microchip shortage began in 2020 with the Covid-19 outbreak. The shortage was caused by both production line interruptions and factory closures. This has been further exacerbated by China’s sudden lockdowns, the war in Ukraine and rising inflation which continue to affect the market.

An increase in the demand for microchips didn’t help the matter. Demand for microchips was driven by the need for appliances for both home entertainment and remote working as people were confined to their homes. Recently though, demand has begun drying up as inflation causes consumers to be more careful in their spending. In fact, earlier this month Reuters reported that “Chip stocks across the world tumbled on Friday after memory chip maker Micron Technology Inc (MU. O) forecast on Thursday much worse-than-expected revenue for the current quarter and said the market had ‘weakened considerably in a very short period of time.”

With the predicted drop in demand and the rising cost of parts, production in some companies has decreased. Micron themselves are experiencing a 10% drop in revenue this quarter. This is having a knock-on effect, with everything from video game consoles to cars needing microchips.

No Need to Fret Yet!

While consumer demand might be slowing, many businesses are still struggling to recover their supply chains. A shortage of microchips equals a shortage of printers, scanners and other equipment. With certain companies slowing production, others have stepped in to fill the gap. Bosch have pledged to invest €3 billion in chip production by 2026. “Bosch, the world’s largest auto supplier to boost European chip production to 20% of global output by 2030, from approximately 8% now.” This is great news for the European market that will help ease the shortage. Hopefully this will inspire other companies to do the same. Furthermore, companies such as TMSC and Global Foundries have invested in increasing their own production of chips, but both have said that they will not be increasing production until 2023.

Industry leaders believe that between the new investments and the decline in demand, the shortage will be resolved sometime towards the end of 2022, certainly by mid-2023.

So where to go From Here?

The global microchip shortage seems like it could continue into 2023 so what can you do to ensure you are affected by it as little as possible?

1. Renew, Reuse, Recycle

As an avid thrifter myself, I would recommend consumers purchasing chip-laden items consider buying second-hand. Evidence suggests that this is happening in some markets already. A recent study found that the price of second-hand cars in the UK has increased 23.4%. There are plenty of suppliers providing asset recycling services to upgrade business equipment and devices where possible. Refurbished equipment is cheaper, saves on waste and can even come with a guarantee so it’s definitely worth taking a look.

2. Digitise, Digitise, Digitise

A great way to help solve the global microchip shortage, especially for businesses, is to turn to the world of digital services to reduce the need to purchase printers and scanners, whether new or refurbished. Physical files can be digitised and made machine readable using Optical Character Recognition software. The documents can be stored using an online Document management system. They will be instantly searchable using your required indexing system but can also be searched using any word in the document. After being digitised, files can be destroyed safely or retained in storage just in case. Check out Records Management providers like Kefron who provide the storage, scanning and Document Management services in one-stop-shop solution.

By utilising a Record Management provider, you are saving money by not having to purchase the appliances needed to do these projects. Space and time are saved allowing you to optimise your space and resources.

For more information on how document scanning services can help ease the microchip drought for businesses see this blogpost.

3. Wait it Out

An option for individual consumers rather than businesses is to just to wait it out. The shortage should be resolved within the next year according to experts. If you can afford to and have the patience simply waiting until the shortage has been eased is an option, though the preceding two are quicker, easier, and most importantly, affordable.