Global Microprocessor Shortage: Why & When Will It Be Over?

Antoine Bechara
Antoine Bechara
July 26, 2022

Computers, cars, microwaves, ovens, video games consoles, computer parts, cellular phones… The list of things that require microprocessors in order to perform their functions is almost unfathomable. That’s why there is such a panic among the technology industry at this time, because things are becoming harder and harder to produce in the necessary quantities for consumers because of the global microprocessor shortage. 

You’ve likely noticed this if you’ve tried to order, well, a great many things – from cars to the Playstation 5. But why is this happening? What’s causing a chip shortage that’s affecting almost every single industry that relies on technology? Causing massive order backlogs and millions of unhappy customers – some of whom are having to wait months for their new car, gadget, or piece of tech. 

Why Is There a Global Microprocessor Shortage? 

We’re going to break down a few reasons why there is a global shortage currently of microprocessors. 

The Pandemic Creates a Problem 

The COVID-19 pandemic created many problems of many different types, for many different manufacturers. One of whom being microprocessor chip manufacturers. This began in the automotive industry, when at the outset of the pandemic, auto manufacturers dramatically scaled back production in anticipation of falling sales – so as not to have a bunch of cars sitting around in showrooms and on production lines – and while that was true for a while, the scale-back proved to be too large, as people began to buy cars faster than the manufacturers were able to produce them. This meant that there weren’t enough microprocessing chips to meet demand.

The Need to Work From Home Creates Sudden Demand 

At the onset of COVID-19, people began unexpectedly having to work from home. This meant that the need for new laptops and computers surged into the millions, unexpectedly. This meant that the numbers of laptops in stock couldn’t meet the demand of customers and the manufacturers of the laptops also couldn’t meet the demand of customers. Parts production of computers were also stalled by COVID-19 infections in the production facilities, further exacerbating the supply chain issue. 

In Short Supply 

Another huge factor is the supply chain issues experienced across the world. Manufacturing plants in the Phillippines and Malaysia, operated by Samsung and TMSC – two of the world’s largest microprocessor manufacturers were hit with multiple COVID-19 outbreaks and struggled to meet the sheer demand because of these outbreaks. 

In short, the largest shortage of microprocessors in history happened over the span of two years, as global production of various items ground swiftly to a halt, then restarted with an unexpected fervour – simply meaning that manufacturers and suppliers could not keep up. The consequences are that a chip shortage has ensued which has cost countless industries millions of dollars, has left customers waiting months for vital car or computer parts, or unable to pick up their car that needed to be repaired – because it needed a new chip. 

The microprocessing chip shortage has affected so many industries around the world, all very quickly and very unexpectedly. It has shown how reliant the global economy and consumers globally are on technology and how that technology – when disrupted by an unexpected global event – can fall behind and create untold damage to the global supply chain and to the bottom lines of their customers. 

When Will It Be Over? 

So, when will the problem of a lack of microprocessors be solved?  Given that the COVID-19 pandemic is starting to wind down (at least in terms of its effect on the world), vaccination rates are skyrocketing, manufacturing is starting to return to pre-COVID levels, according to the President of Xiaomi (one such chip manufacturer). This means that microprocessor production will be almost back in full swing by the end of 2022. Cellular phones will be the first to feel the easing of tension in the industry, according to Xiaomi, then others will duly follow in 2023. 

No matter how you’ve been affected by this microprocessor shortage – I imagine it has been enormously frustrating to have to wait months to buy a new phone, or a new car, or a new laptop – your end will be coming to an end in 2023 as the world looks to resume to production full-swing, as COVID nears the end of its grip on the world through a mostly fully vaccinated global population.

Leave a Reply

Share on facebook
Share on twitter
Share on linkedin