Chip shortage will hit IT-hardware buyers for months to years

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Tech executives and analysts say the current processor-chip shortage and disruption of supply chains thanks to COVID-19 could have a long-term impact on price and availability

A shortage of all sorts of processors and other components could affect the availability and price of IT hardware for the next 12 to 18 months, according to CEOs of major tech companies including Intel, IBM, Extreme, Cisco and Juniper.

COVID-19 triggered an explosion of the global remote workforce, which created an extraordinary demand for new tech gear. It also forced the shutdown of processor plants, and restarting them and renewing supply chains to their pre-pandemic state will be a lengthy process, according to industry executives and analysts. Beyond the pandemic, a recent fire at a large chip plant in Japan didn’t help.

“The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types in 2021,” Kanishka Chauhan, principal research analyst at Gartner said in a mid-May report on the situation. “Foundries are increasing wafer prices, and in turn, chip companies are increasing device prices.”

The shortage first affected the availability of devices such as power management, monitors, and microcontrollers that are fabricated on legacy nodes at eight-inch foundry fabs, which have a limited supply, Chauha stated. That has now extended to other devices, and there are shortages for substrates, wire bonding, passives, materials, and testing, all of which are parts of the supply chain beyond chip fabs. These are highly commoditized industries with minimal flexibility and capacity to invest aggressively on a short notice, Chauha stated.

Some industries have been hit particulaly hard by the scarcity. For example, shortage is expected to cost the global automotive industry $110 billion in revenue in 2021. That forecast is up by 81.5% from $60.6 billion in January, according to the AlixPartners consulting firm.

Source : https://www.networkworld.com/article/3619210/chip-shortage-will-hit-it-hardware-buyers-for-months-to-years.html

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