Analysis

Chips as the new toilet paper

Paul van Gerven
Reading time: 4 minutes

A perfect storm of supply and demand factors has prompted the electronics industries to start hoarding semiconductors. This obfuscates how big the imbalance between supply and demand really is.

Toyota recently joined a long list of car manufacturers that have been forced to scale down their production output due to a chip shortage. For want of a chip, hundreds of thousands of cars will not be made this year. The supply glut will cut almost 61 billion dollars in revenue from the global automotive industry in 2021, consulting firm Alixpartners estimates.

But it’s not just the car industry that’s suffering. The new Playstation 5 and Xbox consoles will be in short supply until at least the second half of the year. Nvidia is struggling to get enough GPUs that power its graphics cards. Qualcomm can’t keep up with the demand for smartphone processors. Its customer Samsung, warning about a “serious imbalance” in the semiconductor market, is postponing the launch of its flagship smartphone. Even mighty Apple is forced to push out an iPhone release.

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