In the last few years, you may have noticed it has been more difficult than usual to get your hands on a computer. You may have also noticed that prices have gone up as well. It’s not like manufacturers have stopped making PCs, so what’s changed recently? In this blog, we’re going to discuss the current PC shortage, what’s causing it, and if things could turn around in the near future.
The PC shortage has no single answer. Rather, there are a mix of factors that all come into play. Some of these factors include increased demand for technology during the pandemic, COVID-19 related production disruptions, and restrictions on Chinese manufacturers. But arguably the biggest contributor has been the lack of computer components.
When we say computer components, we’re not talking about central processing units (CPUs) or graphics processing units (GPUs). Instead, we’re actually talking about something much simpler—the humble microchip. Also commonly called a computer chip, these low tech components are used in a large number of products like phones, tablets, refrigerators, and thermostats. Even cars, as manufacturers increasingly add smart technology to them, use chips.
With such a steep incline in demand, chip makers have had a difficult time keeping up with orders. As a consequence, computer manufacturers have been unable to fill their own orders, causing laptop shortages. In addition, there was also the headline-making blockage of the Suez Canal, a major shipping route for many supply chains.
Did you know that supply chain issues lost Apple $6 billion in the final quarter of 2021? A lot of companies have been impacted by the chip shortage, but what led to it? The answer is similar to why there’s a PC shortage. However, the difference between the two is the main cause of the shortage.
This may come as a surprise, but the United States only produces about 12% of all computer chips. The factories responsible for their production actually closed down early on during the pandemic. Thus, the U.S. relies heavily on outsourcing the manufacturing of computer chips. Additionally, a vast majority of the world’s chips are produced by two companies—Samsung and TSMC.
When the pandemic hit, the ports Samsung and TSMC typically use for shipping were shut down. Containers full of chips sat idle, not reaching their destinations. The situation was exacerbated by a buildup of goods and labor shortages as well.
The final insult to injury was mother nature. Taiwan experienced its worst drought in 50 years. A crucial part of chip manufacturing involves water, and the water shortage poorly impacted TSMC’s output. Lastly, a fire at Japan’s Renesas Electronics plant destroyed the entire building in March of 2021.
A frequently asked computer hardware and software question is, why doesn’t the U.S. manufacture more computer chips? The short and sweet answer is chips are difficult to produce. It’s also cheaper for American companies to just outsource the production to businesses in other countries.
About 30 years ago, the chip manufacturing landscape looked much different, with the U.S. producing about 37% of the world’s chip supply. That started to change as companies realized it would be cheaper to build factories in other countries. These chosen countries offered more attractive financial incentives to construct factories, like tax breaks and grants. There’s also less regulation in several parts of Asia.
About 75% of chip production these days comes out of Asia. In the next few years, it’s expected for China to become the world leader of chip production. But, recent developments could encourage more companies to build chip facilities in the U.S. in the near future.
Now that you know what’s behind the PC shortages, it’s time to talk about what to expect for the near future. Unfortunately, there are no quick fixes for our current predicament. We’re likely to see the chip shortage to continue through 2022 to 2023.
However, there may be some light at the end of the tunnel. Plans are in motion to build new Intel and Texas Instruments foundries in the U.S. These factories would add to the 29 other factories built around the world this year and last. According to analysts from Counterpoint, it’s believed that although there is still going to be a chip shortage, the shortage should begin easing in the second half of 2022.
If your business has been affected by the PC shortage, you may be wondering what you can do to improve your situation. Unfortunately, there’s no kind of cheat code or life hack to solve this situation. But there is something you can do to improve your chances of getting the computers you need.
If you’re buying equipment for business, make sure to act quickly when they become available. Be sure to look out for lower quality products, and don’t buy from less-than-reputable vendors. And keep in mind, if your business doesn’t require the latest technology, it may be in your best interest to consider delaying your purchase.
Another option is to partner with a 3rd party IT provider, like Upfront Computer Solutions. Our computer hardware technicians can help you find the PC equipment your business needs. We can also guide you through the process of sourcing the hardware so there is no risk to you.