The next chip shortage is just a matter of time

Trade tensions prompting stockpiling, a once-in-a-century pandemic and fires, droughts and extreme winter weather hitting manufacturing plants across the globe – the current chip shortage seems the result of a perfect storm. It’s tempting, therefore, to consider it as a freak accident, a one-off. But while this particular set of coinciding circumstances may be unique, it would be foolish to think that supply gluts such as the current one are a thing of the past.

First of all, history shows that major shortages are a common occurrence. Over the last three decades, they happened every five years on average. Usually, they’re precipitated by external factors, such as an economic recession or a natural disaster, but they also ‘just happen.’ Perhaps because it’s been relatively smooth sailing over the past decade – the last supply glut occurred a decade ago after a tsunami in Japan – companies have been lulled to sleep, but there’s no reason to suppose that the historical pattern will change.