Global Chip Shortage Impacting Businesses in the Bay Area

Global Chip Shortage Impacting Businesses in the Bay Area

The current attention given to the computer chip shortage is a huge indicator of the world's reliance on technology. The predicted losses by the automotive and IT industries paint a picture of how computing technology drives the world. Additionally, the industry-wide effect could last anywhere between six months to two years.

The global computer chip shortage is already affecting numerous business products, including desktop computers, laptops, printers, servers, and consumer goods, such as alarm clocks and automobiles. As a Bay Area business owner, you ought to prepare your IT department for the shortage that experts predict could last well into 2023. Educate your staff about the dynamics of the shortage, how it might affect them, and the steps to take to minimize the impact in the long run.

TSMC is Raising Computer Chip Prices

TSMC is the largest chipmaker globally that manufactures processors used by Nvidia, Apple, AMD, Qualcomm, and certain Intel products. Due to the rising demand for computer chips, its products are just about to get more expensive. According to a new report from Wall Street Journal, TSMC plans to increase the prices of its advanced chips by approximately 10 percent and less advanced ones by about 20 percent.

Semiconductor supply has become a critical factor for major tech and automotive organizations. As chips increasingly become scarce, the prices of electronic devices such as phones, laptops, smartwatches, and game consoles are projected to increase significantly.

Increasing the prices of what was already one of the most vital and costly components in any electronic device (for instance, the iPhone 12's three most expensive components are its A14 SOC and Qualcomm modem) means that the prices of some of the most popular and regularly used devices in the world could hit the ceiling soon.

Although the Wall Street Journal's report didn't specify whether the TSMC's price increases will impact Apple or if the company will pass those extra costs down to the customer, there is a high possibility that a price increase is imminent. Besides, TSMC is literally the only global chip supplier capable of creating chips at the advanced level and capacity that Apple requires to produce its A-series and M-series chips for Macs, iPhones, and iPads.

Apple CEO Tim Cook also warned in the organization's last earnings call that semiconductor supply constraints could impact its upcoming iPad and iPhone products this fall, particularly for older, less advanced semiconductors.

The Impact of the Global Chip Shortage

As TSMC raises chip prices, some of the supply issues may actually be alleviated by reducing some of the demand that drives the scarcity in parts. Additionally, it may help TSMC continue to raise the money it dearly needs for its ambitious investment towards expanding its chip production capacity. Examples include spending $100 billion through 2023 to expand its $12 billion manufacturing plant in Arizona and numerous other projects. During the latest quarterly earnings report, TSMC had warned that the chip shortage would likely extend into 2022.

Since nearly every industry demands chips, the shortage will significantly affect the production of a myriad of tech products and trigger price increases. Today, every industry is striving to bring its devices into a smart age that consumers are increasingly getting accustomed to. Data centers, IoT manufacturers, and cryptocurrency miners are clear indicators that there are more buyers than products.

Besides, some of the most advanced chips are found in PCs, servers, and laptops, which will likely witness some fluctuation over the next couple of months and through to 2022. Experts project that there might be a slight dip in demand from manufacturers, but not adequate enough to have a serious market impact. Big brands such as Dell, HP, and Lenovo will also likely inflate their prices to cover the extra cost of computer chips.

What Your IT Department Should Do About the Global Chip Shortage

The global chip shortage is partly fueled by a shift in our culture due to the pandemic. Many organizations have been forced to deploy a hybrid work model by deploying both in-office and remote employees. This arrangement requires reliable and updated communication and collaboration equipment to manage daily to-do lists.

In a hybrid work scenario, businesses are increasingly purchasing laptops to give employees the flexibility to work from multiple locations. Therefore, your IT department needs to determine today's supply needs and plan adequately for the company's future growth.

Additionally, IT teams need to prioritize updating technology plans, ensuring that staff members have the IT products and hardware they need to cope with the changing network demands. This may mean evaluating product warranties and establishing a more detailed schedule to manage equipment replacements and upgrades.

Work with a Reliable Managed Service Provider

With the cost and availability of technology products likely to worsen over the next couple of months, it's the right time to leverage managed service providers' expertise and tech capacity (MSPs). Reputable MSPs provide not just IT support but also specialize in technology acquisition. If you have trouble acquiring the end-user equipment or infrastructure hardware your business needs, an MSP will likely have options available to them that you don't.

MSPs have also forged the right relationships with technology vendors, giving them more opportunities than your average IT department. Besides, they often get preferential treatment and pricing offerings that they can pass down to their clients. Since the global chip shortage seems not to be going away anytime soon, it's best to work with a reliable outsourced IT service provider to help you navigate through the challenges.

On that note, On Time Tech specializes in providing quality IT services and IT support for small- and medium-sized businesses throughout the San Francisco Bay Area. No matter your industry, On Time Tech provides the solutions you require to maximize productivity and drive growth. We also recognize that every business must deeply invest in data and technology to remain competitive in today's economy. Contact us today to learn how we can help cushion your company from the impact of the global chip shortages!