Top tech and automobile companies are getting hit by the global crisis currently presenting itself. Just after beginning to see the light at the end of the tunnel in the case of the COVID 19 pandemic, another problem presents itself
The chips are no more enough.
Which are Chips
Technical, a chip is a combination of transistors on a piece of board. It might as well be regarded as the building block of technology. Show me a piece of technology I will identify several key components that would turn out to be a combination of chips.
The possibility of a chip shortage had already presented itself in 2020. There was not the world could do as there were more pressing issues at hand. Now we are feeling the full effect. Apple and BMW are already reporting chip shortages.
Four weeks ago, Apple was hit massively by a shortage in its chip supply. “Apple gets display parts from Texas Instruments, while Broadcom is its longtime supplier of wireless components. One TI chip in short supply for the latest iPhones is related to powering the OLED display. Apple also is facing component shortages from other suppliers.” Bloomberg. This incident has led to a reduction in the supply of the iPhone 13.
After Apple, BMW was next. BMW earlier warned that the chip shortage that has hit the auto industry may lead to further loss of production.
Production was halted at various sites, either daily or in individual shifts, said Milan Nedeljkovic, a member of the BMW board of directors in charge of production
Semiconductor supply is critical especially in sports cars today, its functionality expands from the power steering and backup cameras to emergency braking systems.
Why is there a shortage?
A few things can be held responsible for the current shortage.
COVID-19 Pandemic
This is where the problem began in the first place. The pandemic forced a lot of companies into a full closure. China where most of the chips were coming from was at the forefront. Currently, companies are recovering but the problem remains because they are at max production level considering the safety protocol they have to follow.
Trade Wars
The world is still facing the effect of two powerful countries in a trade war. The USA-China trade war has affected a lot of business. USA trade restriction on Chine forced US companies to stop importing chips from China. Those companies now have to rely on Taiwan, Samsung, and a few others for their supply.
It can be seen that the demand is much more than the supply. The world needs to act fast hence there would be a sudden increase in the price of most products.
