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Impact of the Global Chip Shortage on Information Technology


Much has been made over the global production shortages in recent months. The COVID-19 pandemic coupled with depleted labor pools and other more industry-specific hurdles left several market segments gasping for air. The shortfall in semiconductor chips is one of the most acute. In our hyper-tech society, these chips, and the resources required to manufacture them are highly constrained due to the following conditions, not necessarily in order: 1) the increase in chip utilization in a wide-range of products, both commercial and consumer (pre-COVID-19), 2) pre-pandemic shortages on several critical compute components such as processors, solid-state hard drives, and high-resolution screens, 3) the COVID-19 outbreak and subsequent shutdown, 4) the increase in work-from-home technological requirements, 5) overwhelming percentages of school districts switching to virtual learning options, 6) the increase in consumer products geared toward at-home entertainment, 7) the labor shortage caused by the multiple pandemic-related conditions and reactions, and 8) the convergence of all-of the-above nearly simultaneously. Once the initial surge of purchases hit the technology distribution channel, supply on so many systems and their respective components ceased to be available. As manufacturers of technology and non-technology compete for available chips, individual products are released in spurts as first one producer and then another obtains a cache of chips with which to produce a particular line. Until chip production again flows freely (liberal estimates say end of 2021, while more conservative approaches say late 2022), product is theoretically shipping on a first come-first serve basis.


For further inquiries, please contact Dr. Scott Whaley, Grassroots Advisors, 803-448-0005, swhaley@grassrootsadvisors.com





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