Given the demand outpacing the supply of the semiconductor chips for our laptops PlayStation 5, Xbox Series X, and many others. The markets seem to have come to a halt. With demands/orders jamming the system more than supply saturating the system.
There are many answers to your questions of why.
One factor is how the shutdown of factories slowed down production and to top it all of, people sitting at home feeling idle just kept ordering more laptops and Ps5’s.
Another reason is in fact, the trade wars started with China by Donald Trump which has decreased the size of the market.
During an interview with the verge, UCLA professor — Christopher Tang stated:
“In the year 2000, we used to have 30 companies that made their own integrated circuits. Then, they discovered that it’s cheaper to outsource,”
So another reason for our problem is that these companies sought what would be most convenient for them—not for the market.
Which was only natural.
With even chipmakers like AMD switching to outsourcing—where they outsource the actual manufacturing to other companies (like Samsung or TSMC)—which in turn, made the market smaller and demand higher—and the increasingly computerized nature of even more mundane products like cars or smart home accessories — has spiked, there’s never been more need for chips.
According to experts though, the solution for this problem is time and more time. Eventually, demand will stop outpacing supply and things are likely to go back to normal.
But on the other hand, TSMC has announced plans to invest $100 billion over the next three years to increase its capacity to meet rising demand.
FIND OUT MORE
- See the list of the world’s top chip producing companies
- How computer chips work?
- What is silicon and why are computer chips made from it?
- What is the importance of processing speed in your PC?
- Why is Donald Trump banned from twitter?
And Intel plans to spend $20 billion on expanding its fabs in Arizona, as well as opening its doors to produce chips for other companies (similar to how TSMC and Samsung already operate), adding a new major supplier to the marketplace.
So like they say, “patience is bitter but its fruit is sweet.” We’ll just have to wait and see.