There aren’t enough chips to go around. The ongoing global semiconductor shortage means the difficulty of buying a PlayStation 5, Xbox Series X, or high-end GPU from companies like Nvidia or AMD could go on for months — if not for the rest of 2021.
And it’s not just gaming gear: car companies like Ford and GM are having problems with their truck production, Apple supplier Foxconn is warning of part delays that could last until 2022, 5G rollouts are getting delayed, and Samsung is warning of a “serious imbalance” in the semiconductor industry.
There are a lot of reasons why this shortage is hitting now: trickled-down delays from COVID-19 shutdowns of factories last year, a surge in demand from customers stuck at home during the pandemic who want new laptops, along with more political issues like former President Trump’s trade war with China.
It’s not that there aren’t enough chips, so much as there aren’t enough chipmakers
But the issues lie even deeper than that: it’s not that there aren’t enough chips, so much as there aren’t enough chipmakers. “In the year 2000, we used to have 30 companies that made their own integrated circuits. Then, they discovered that it’s cheaper to outsource,” explains UCLA professor Christopher Tang in an interview with The Verge.
As demand for products — and the increasingly computerized nature of even more mundane products like cars or smart home accessories — has spiked, there’s never been more need for chips. But at the same time, the industry has become smaller over the past several decades, as many technology companies, and even chipmakers like AMD, have switched to a fabless model where they outsource the actual manufacturing to other companies (like Samsung or TSMC).
Solving this chip shortage, though, will likely just be a matter of time: eventually, demand will stop outpacing the limited supply, and things should go back to normal (and you’ll be able to just buy a PlayStation without jumping through online hoops and endless digital queues).
But preventing future shortages will probably require bigger changes to how the industry at large sources semiconductors to reflect our increasingly digital world. We’re already seeing some of them: TSMC has announced plans to invest $100 billion over the next three years to increase its capacity to meet rising demand. And Intel plans to spend $20 billion on expanding its fabs in Arizona, as well as opening its doors to produce chips for other companies (similar to how TSMC and Samsung already operate), adding a new major supplier to the marketplace.
But those changes will take time and a commitment from the industry to actually build a healthier supply chain over the next several years and decades. And very little is likely to make it easier to buy that hard-to-find gadget in the next few months. But those changes could eventually make buying a hypothetical PlayStation 6 or Xbox successor easier down the line.