• Sophia Jones

Helping Businesses Through the Chip Shortage


The current global shortage of semiconductors, or chips, is affecting production in several industries, making it harder for businesses and consumers to get the products they need. Businesses that need to purchase PCs and other electronics are experiencing longer wait times and paying higher prices for new products. Read on to learn more about the chip shortage and about the ways Vecmar is helping businesses get the technology they need on time at an affordable price.


What is the Chip Shortage?


Not long ago, chips were required for only a small range of sophisticated machines and very few consumer electronics. With rapid advances in technology and the rise of smart devices, chips are now essential to a variety of products, ranging from household appliances to cars, cell phones, and even children’s toys. Not only do more products require chips than in the past, but consumer demand for these products has risen dramatically since the start of the COVID-19 pandemic. Chips are needed for more products in larger quantities than ever before. This unprecedented increase in the need for chips has led to production delays and product shortages across several industries.


The solution to this problem seems simple. If more chips are needed, then more should be produced. However, chip production is time-consuming and tedious. Producing just one chip takes six months and involves a resource and labor-intensive, multi-stage process. The ordinary challenges of chip production have been exacerbated in the last year by the pandemic, natural disasters, global politics, and a fire at one of the world’s leading chip production facilities.


Every day seems to bring more bad news for what some media outlets have deemed “Chippagedon.” Taiwan, home to the producer of more than half the world’s semiconductors and Apple’s primary chip supplier, is experiencing their worst drought in 50 years. This event threatens to affect chip production, too, as just one chip factory uses between 2 and 4 million gallons of ultra-pure water every day. Meanwhile, material shortages from COVID-19 supply chain disruption and trade conflicts between China and the United States continue to impact chip production and distribution. Chip manufacturers are developing creative solutions to increase production, but with so many new obstacles, keeping up with demand is impossible.


How Long will the Shortage Last?


Since many factors affecting the chip shortage are beyond manufacturers’ control, predicting how long the chip shortage will last is difficult. However, industry leaders, including Intel CEO Pat Gelsinger, have provided some insight into the chip shortage. Intel is the largest by-revenue semiconductor company in the United States and recently announced plans to spend $20 billion on the construction of two new factories in Arizona to address the high demand for chips. In a recent interview, Gelsinger said, “I don’t expect that the chip industry is back to a healthy supply-demand situation until ’23. For a variety of industries, I think it’s still getting worse before it gets better.” Gelsinger’s prediction is reasonable considering some chip manufacturers have provided buyers with lead times as long as 18-25 weeks, the longest since chip-making data tracking began in 2017.


While many industries have been affected by the chip shortage, personal computing is one industry that has been hit the hardest. Global PC shipments increased 55.2% in the first quarter, and demand is expected to climb steadily. However, industry leaders HP and Dell acknowledged the chip shortage will limit their ability to supply PCs at least through the end of the year.


What does the Chip Shortage mean for Businesses?


A global chip shortage lasting two more years will make it more difficult for businesses to acquire the technology they need. If new products are available at all, there will be very limited availability, a significant wait time, and a high price tag attached. Dell CFO Thomas Sweet, HP CFO Marie Myers, and Lenovo COO Gianfranco Lanci, have confirmed personal computer prices will rise for the remainder of the year due to inflated component costs.


Vecmar Can Help


Because Vecmar’s remanufacturing process uses existing machines, our pricing and lead times will remain unaffected by the chip shortage. Vecmar’s remanufactured thin clients are a great choice for businesses looking to upgrade their technology in a timely and cost-effective manner. Learn more about our thorough remanufacturing process here.


As personal computers become more expensive and harder to find, thin clients can serve as a more secure and durable replacement. Find out about the benefits of thin clients as PC replacements by watching our short video on why thin clients are superior to standard PCs.


Don’t let the chip shortage hold back your business. Call us today at 1-800-949-9850 for more information on Vecmar’s readily available and affordable thin client solutions.





References


Intel CEO Gelsinger says chip shortage to last two years - The Washington Post

Chips Are in Hot Demand—and That’s a Problem - WSJ

Dell, HP Say Chip Shortages Will Hit PC Supplies This Year | Technology News (ndtv.com)

Chip Shortage Brings Frustration but More Business to Industry’s Middlemen - WSJ

Why Is There a Computer Chip Shortage? Cars, Tech Face Supply-Chain Issues (businessinsider.com)

Chip shortage will lead to higher PC prices as Dell, HP, and Lenovo pass on higher costs | ZDNet

Global chip shortages, supply chain woes leading to tech infrastructure inflation | ZDNet

The global chip shortage is a much bigger problem than everyone realised. And it will go on for longer, too | ZDNet

The impact of the global chip shortage continues to ripple across the tech supply chain | ZDNet

Chip Shortage Situation Worsens: Chip Lead Time Reached 18 Weeks (gizchina.com)

No Water No Microchips: What Is Happening In Taiwan? (forbes.com)

Taiwan drought exposes just how much water chipmakers like TSMC use | Fortune


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