The shortage has already been rippling through various markets since last summer. It has made it difficult for schools to buy enough laptops for students f orced to learn from home, delayed the release of popular products such as the iPhone 12 and created mad scrambles to find the latest video game consoles such as the PlayStation 5.
But things have been getting even worse in recent weeks, particularly in the auto industry, where factories are shutting down because there aren't enough chips to finish building vehicles that are starting to look like computers on wheels. The problem was recently compounded by a grounded container ship that blocked the
On Thursday,
These snags are likely to frustrate consumers who can't find the vehicle they want and sometimes find themselves settling for a lower-end models without as many fancy electronic features. And it threatens to leave a big dent in the auto industry, which by some estimates stands to lose
“We have been hit by the perfect storm, and it's not going away any time soon," said Baird technology analyst
IS THE PANDEMIC TO BLAME?
Sort of. The pandemic prompted chip factories to start shutting down early last year, particularly overseas, where the majority of the processors are made. By the time they started to reopen, they had a backlog of orders to fill.
That wouldn't have been as daunting if chipmakers weren't then swamped by unforeseen demand. For instance, no one entered 2020 expecting to see a spike in personal computer sales after nearly a decade of steady decline. But that's what happened after government lockdowns forced millions of office workers to do their jobs from homes while students mostly attended their classes remotely.
ARE OTHER FACTORS ARE AT WORK?
Yes. Both Sony and Microsoft were preparing to release highly anticipated next-generation video game consoles for their PlayStation and Xbox brands, respectively, that required more sophisticated chips than ever. To add to the demand, wireless network providers are clamoring for chips to power ultrafast “5G" services being built around the world.
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WHY IS THE AUTO INDUSTRY BEING HIT
Stay-at-home orders drove a surge in consumer electronics sales, squeezing auto parts suppliers who use chips for computers that control gas pedals, transmissions and touch screens. Chip makers compounded the pressure by rejiggering factory lines to better serve the consumer-electronics market, which generates far more revenue for them than autos.
After eight weeks of pandemic-induced shutdown in the spring, automakers started reopening factories earlier than they had envisioned. But then they were hit with unexpected news: chip makers weren't able to flip a switch quickly and make the types of processors needed for cars.
HOW ARE AUTOMAKERS DEALING WITH THE SHORTAGE?
They’ve canceled shifts and temporarily closed factories.
The harder hit automakers have diverted chips from slower-selling models to those in high demand, such as pickup trucks and large SUVs.
HOW WILL THIS AFFECT PEOPLE WHO WANT TO BUY A NEW CAR?
Expect to pay more. Supplies of many models were tight even before the chip shortage because automakers were having trouble making up for production lost to the pandemic.
WILL OTHER POPULAR PRODUCTS BE AFFECTED THIS YEAR?
WHAT'S GOING TO PREVENT THIS FROM HAPPENING AGAIN?
There are no quick fixes, but chipmakers appear to be be gearing up to meet future challenges.
Intel, which for decades has dominated the market for PC chips, recently made waves by announcing plans to invest
Compelled by the current shortage, TSMC also has committed to spending
And President
But chips won't start coming out of any new factories built as part of the spending splurge for two to three years. And even as existing factories ramp up and expand to meet current demand, some analysts wonder if there might be a glut of processors a year from now.
Krisher reported from
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