The electronic industry has been suffering from a devastating shortage of silicon chips since 2020. The worrying part is, it may last a lot longer than anticipated. The price of electronic components especially PC parts has skyrocketed as a result of the silicon shortage.
In this article, I will discuss in detail about why the world is currently facing a silicon shortage. I will also discuss about the impact of silicon shortage on PC components and how to solve them.
What Is Silicon?
If you are new to the whole silicon shortage fiasco, you may wonder what exactly silicon is. Silicon is a metalloid that acts as an excellent semiconductor. The semiconductor is a type of material whose resistivity drops with the increase of temperature.
As a result, semiconductor i.e. silicon is ideal for manufacturing computer chips and other electronic components. Silicon is being used as a semiconductor since the late 20th century.
Why Is Silicon Used Widely?
Silicon is widely used because of many reasons. But the main reason why it is so readily used is due to its semi-conductive properties. Silicon can conduct electricity under specific conditions and act as an insulator under others. Moreover, the conductivity of silicon can easily be manipulated by using a process known as doping.
Silicon is also one of the most abundant elements found in the earth’s crust. About 27% of the earth’s crust is made up of it. As a result, it is much more economical to use silicon in manufacturing electronic chips.
The ease of fabrication and extraction is another reason why silicon is used all around the world. Furthermore, it is easy to purify silicon from other materials thanks to its chemical properties.
Microchip manufacturers all over the world prefer using silicon in their chips because it can transfer electrons faster and help to eradicate any kind of latency.
Why Is The World Facing Silicon Chip Shortage?
The world is now facing one of the worst pandemics of the century. As a result, all chip manufacturing factories and logistics related to manufacturing have come to a halt. The “Stay at home” motto has stalled the extraction and fabrication process of silicon which is now creating a worldwide silicon shortage.
Due to covid19, millions of people are forced to work from home. Because of that, the demand for electronic items such as laptops, desktops, smartphones, and gaming consoles has soared exponentially.
The chip manufacturers have failed to supply these electronic factories with enough chips because of the high demand for electronic components.
Many auto companies have faced a steep decline in sales because of the pandemic. In order to make a profit, they had to cut back on production and had to order fewer chips. But now because of the global chip shortage, millions of nearly completed vehicles are sitting in factories without the necessary chips required to run them despite having high demands for the vehicles.
The recent US and Chinese trade war have also had a negative impact on the semiconductor industry. A major chunk of semiconductor is being produced by the Chinese-owned SMIC semiconductor company that has been blacklisted by the Trump administration.
The restrictions imposed by the US government in 2020 on Chinese companies are hindering US companies to source semiconductors from China which is further aiding the silicon shortage.
Is 5G Technology Responsible For The Chip Scarcity?
The world is now switching to the 5G technology. Consequently, about 25% of all smartphones sold in 2020 were 5G enabled. The new 5G devices use more chips than the previous generation of smartphones.
The situation can only get worse because almost all mid-range to high-end smartphones manufactured in the Q1 of 2021 offered a 5g variant of their normal models.
Rising Price Of PC Components
If you are a PC enthusiast then you might have noticed the rising price of PC components. The price of PC components especially CPU’s and GPU’s have increased significantly over the last few months.
Global silicon chip shortage is one of the reasons behind this price hike. Due to the increasing demand and less supply of silicon chips, the price of PC parts is rising.
Another reason for the increasing price of PC components is the cryptocurrency boom. The price of cryptocurrencies such as bitcoin has escalated absurdly. As a result, more miners are buying off CPU’s and GPU’s for mining operations. Miners use powerful computers to solve complex mathematical calculations in order to earn cryptocurrency.
Scalpers and hoarders are also responsible for the rising price of PC parts. They buy off newly released products in order to create an artificial shortage in the market and sell those products at an extremely high price later.
For instance, if you want to buy the newly released Nvidia RTX 3060ti graphics card, you have to pay almost 3 times the retail price thanks to the scalpers.
The same thing is happening in the CPU market as well. Scalpers are using bots to buy off all the stocks of new products. The new Ryzen 9 5900x processor which retails for around 549 US dollars, is now being sold for more than 750 US dollars because of the scalpers.
How Long Will The Shortage Last
To be honest, the situation is very dire in this case. No one can exactly guess how long it will take before the market completely recovers from the chip shortage.
Especially with the pandemic still going, it will be very difficult to ramp up the production of silicon chips in order to satisfy the ongoing demand.
Recent brutal winter storms in the USA can also negatively impact the recovery process of silicon chip shortage. The biggest bottleneck in eradicating the silicon chip shortage is the sanction placed by the US government on Chinese companies. We can expect the silicon chip industry to fully recover from the shortage within late 2021 to early 2022.
How Can We Solve The Silicon Chip Shortage?
The best way to solve the silicon shortage is by reopening all the closed silicon factories. Before opening the factories, the factory owners should ensure that all their workers are properly vaccinated and minimum covid safety is being maintained on the factory floor. Moreover, the US government should ease the sanctions imposed on Chinese companies.
Necessary actions must be taken by every country against the scalpers and hoarders as well. Hopefully, by properly implementing these steps we will be able to solve the global silicon chip shortage and bring the price of PC components down to their normal price.
Writer – Masrur Plabon