What is the Global Chip Crisis? What are the Effects on Our Daily Life?

The global chip shortage is starting to have major consequences in our daily lives. So what is the chip crisis affecting the whole world and when is it expected to end? We answered many questions about the chip crisis for you.

Today, almost every electronic device is powered by semiconductors, also called microchips, which contain silicon and are used to create integrated circuits. Cars, digital displays, entertainment systems, parking sensors, even electric toothbrushes rely on this technology. But with demand for these tiny components that power so much of our lives far outstripping supply, there is now a global shortage of chips. Translated with DeepL.com (free version)

What is the Global Chip Crisis?

Computers used to be made of tubes and dials, which were not only fragile but also required a lot of electricity. But then they were replaced by semiconductor chips, which are faster, cheaper and more efficient. These chips are now enabling significant advances in computing, communications and applications used by almost every industry. In other words, everything needed to calculate or process information is available on a chip, and that's why it plays such an important role in our lives. Today, millions of products - cars, smartphones and more - rely on computer chips, also known as semiconductors, but there are currently not enough of them to meet industry demand. This supply-demand imbalance, which began in the first quarter of 2021, is being referred to globally as the chip crisis.

Why Did the Global Chip Crisis Occur?

It is mainly pandemic conditions that have turned chips into a crisis factor. The rise in remote working has led to increased demand for computers, network peripherals and other consumer electronics with chips. But existing stocks have also been depleted as chip production facilities have been shut down due to lockdowns.

Chip Shortage in Vehicle Production

The automotive industry, which needs chips for everything from computer management of engines to driver support systems, is taking the biggest hit in the global chip crisis. So much so that brands such as Ford, Volkswagen, Jaguar and Land Rover, which are considered the giants of the automotive industry, had to close their factories, lay off workers and reduce vehicle production. Some automakers have given up on high-end features due to the lack of chips installed in cars. For example, Renault announced that it would no longer use digital displays in some of its models. Delivery times have gotten quite long. Automakers are forced to stop production or ship unfinished products. As the supply of vehicles decreases and consumer demand increases, price inflation occurs, affecting millions of consumers. According to a recent Bloomberg report, the automotive chip crisis is starting to affect rental car companies as well. Hertz and Enterprise, famous car rental brands that buy and rent new vehicles in bulk, are now reportedly resorting to buying used cars at auction.

What are the Impacts of the Chip Crisis on Our Daily Lives?

The chip crisis that first hit the automotive industry during the COVID-19 pandemic continues to have a cascading effect, causing global disruptions. While there remains a shortage of chips in vehicle production, chipmakers have had to shift their focus to other areas such as computing equipment and mobile devices. As more people work remotely, 5G and cloud-based services have grown, and communication platforms like Zoom have become an integral part of our workflow. All these developments have further increased the already unmet demand for chips.
Today, research shows that around 169 industries are affected by the global chip shortage. For example, global shipments of cell phones have dropped significantly. Production of low-margin processors, such as those used in washing machines or small household appliances, is also taking a hit. While most retailers, and therefore consumers, still have access to these products at the moment, they are likely to face supply problems in the coming months.

When Will the Chip Crisis End?

The growing chip shortage is making it clear that global supply chains are under pressure from multiple fronts. In this new environment created by the pandemic and changing consumer behavior, the shortage of semiconductors and components is likely to get worse before it gets better, due to our next-generation chip-dependent technologies. Many brands have already started to scale back their production and profit targets going forward. This is expected to be reflected in the selling prices of cars and other technological gadgets. For now, consumers and businesses have only one choice. To make the most of their existing devices, cars and other equipment and not upgrade until the crisis is over.


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