Chipageddon Could Last Until 2023, According to Analysts

Young , beautiful and  proud female mechanic in Car service repairing Vehicle computer and doing  chip tuning.
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Chips are omnipresent, from cars, phones, computers and even toothbrushes, but the recent shortage shows no sign of ending. The situation is so bad, that some experts even call it “chipageddon” or “chipocalypse.”

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Glenn O’Donnell, a vice president research director at advisory firm Forrester, believes the shortage could last through 2022 and into 2023, because demand will remain high and supply will remain constrained, according to a blog post.

O’Donnell says that these shortages threaten product deliveries from PCs to automobiles to consumer electronics.

Part of the problem is a classic supply and demand imbalance. “Demand for cloud computing services from providers like AWS, Microsoft Azure and Alibaba continues to skyrocket. They buy lots of semiconductors. Mobile phone sales remain hot. Makers like Apple, Samsung and Huawei buy lots of chips. PCs are hot. They buy lots, too! Piled atop all that is a shortage of GPUs and other chips gobbled up by cryptocurrency gluttons. Demand is hotter than ever, and it’s only getting hotter,” he wrote.

And of course, the pandemic played a role in this demand surge, too.

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“With the work-from-home surge came the surge in PC sales — you need a good PC to work from home. PC makers buy LOTS of semiconductors. Zoom, Teams and other collaboration platforms became the meeting room, the water cooler, the schoolroom and the family reunion all rolled into one. Demand for these services exploded. Since they are all running in the cloud, those aforementioned cloud services need more chips,” he added in the post.

He adds that the semiconductors have a ripple effect on products in other markets. “If it has a plug or a battery, it is probably full of chips. If the chip supply is tight, these other products suffer delays or even cancellations. Your Ring doorbell, your new car, even a smart toilet needs chips,” he said.

As people experience availability problems or price increases when buying new products, O’Donnell recommends patience. In addition, he the other option is to pay the increased fee. “When supply is low and demand is high and you want it now, you could pay a hefty price,” he said.

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You can also choose another configuration. “See if there is a similar product available. Maybe it is a PC with an Intel processor instead of AMD, or maybe it has less memory,” he suggested. And finally, buy used or refurbished products.

“The secondary market — the so-called circular economy — is hotter than you might know, and it’s full of good stuff to buy,” he noted.

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About the Author

Yaël Bizouati-Kennedy is a former full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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