TVs, laptops and tablets were in high demand during the Covid-19 pandemic as people worked and studied via Zoom, chatted on Skype and liked Netflix to ease the blues when locked up. But all that extra screen time has also helped set in motion a semiconductor crisis that is driving up prices for some gadgets ̵
In recent months, the price of larger TV models has risen by about 30 percent compared to last summer, according to market research firm NPD. The jump is a direct result of the current chip crisis and emphasizes that the repair is more complex than just increasing production. It may also be a matter of time before other devices that use the same circuits – laptops, tablets and VR headphones among them – experience a similar shock from a sticker.
Some manufacturers are already noting a potential rise in prices. Asus, a Taiwanese computer maker, said during a quarterly profit call in March that a shortage of components would mean “further price increases” that are likely to affect consumers.
“Prices are definitely – unfortunately – rising” for these components, says Michael Hurlston, CEO of Synaptics, a company that sells touch control integrated circuits to consumer electronics manufacturers. “In certain cases, we pass these prices on to our customers and we have heard that they pass these increases on to their customers.”
While supply shortages are being felt in the semiconductor industry, these display-related integrated circuits pose specific challenges. Because they are not very advanced, the circuits are usually made in chip factories that are several generations behind the cutting edge. With chipmakers focused on building more modern manufacturing plants that produce more valuable components, there is little incentive to invest in the capacity of older facilities. It’s just not possible to throw more of them even when the demand jumps.
All types of devices are already affected by chip shortages. Sony told analysts this week that the PlayStation 5 will remain in short supply until 2022 due to the crisis. Companies that act as brokers of electronic components say some components have seen prices jump by orders of magnitude; voltage regulators used in countless products, which typically cost 50 cents, sell for $ 70. But at the consumer level, products that require display integrated circuits feel the impact first and foremost due to these factory limitations.
“The word I heard recently was that stocks were depleted,” said Peggy Careers, vice president of AVNet, an electronic component provider. “So these new prices will hit retail outlets and consumer consumption.”
Although this is a kind of integrated circuit, the impact is wide-ranging. “Anything with a built-in screen will be affected by these price increases,” said Paul Gagnon, senior research director for consumer devices at research firm Omdia. That includes computer makers, he says, who have managed to avoid increases by selling devices at the same price but with less memory, for example.
Electronics retailer Monoprice is affected by the drought of components, says Paul Kolas, the company’s vice president of the product. He claims that Monoprice will not raise prices, but may have to cancel sales and other promotions. “In some cases, we also see the need to invest more in advance payments to partners to ensure that long lead parts are secured to support our delivery requirements.”
The combination of factors contributed to the unprecedented drought of chips. The pandemic has boosted demand for home electronics and cloud services, and the economic slowdown has also led some industries to misjudge how demand will decline.
The impact is also felt beyond traditional consumer technologies. In particular, carmakers are left flat-footed after expecting less sales. After canceling orders for semiconductor components in advance, many carmakers had to suspend production while waiting for supply reinforcements to arrive. Wider supply chain disruptions also hurt, including a fire in March that stopped a plant in Japan that produces a number of different semiconductor components – including display integrated circuits.
Geopolitical tensions between the United States and China have also contributed. In the last few years, the US government has imposed sanctions on major Chinese consumer technology companies, including Huawei and ZTE, by blocking their access to state-of-the-art chips and urging them to store as much as possible.
Many experts expect the semiconductor crisis to last more than a year and could contribute to reshaping the global landscape process. The shortage has highlighted the importance of chip production for many industries and state-of-the-art chips will be vital for progress in key areas such as artificial intelligence, 5G and military technology.
The leading US chipmaker, Intel, has lagged behind competitors such as TSMC in Taiwan and Samsung in South Korea in recent years, but the company plans to invest heavily in efforts to regain leadership. The U.S. government has also offered a $ 50 billion stimulus to the U.S. chip industry in a bid to bolster U.S. chipmaking capabilities.
But that won’t help in the current situation, according to Harlston of Synaptics, a chain maker. “It’s just a simple economy,” he says. “There is a finite amount of supplies, we are all fighting for it.”
This story originally appeared on wired.com.