Chipset Shortages

Chipset Shortages: How Approved Technology is supporting its customers during challenging times

What is it Chipageddon?

You will probably have heard about the ongoing global semiconductor chip shortage that is halting production operations in key industries (affectionately nicknamed ‘chipageddon’).

Although the COVID-19 pandemic was the initial catalyst and created conditions that led to the global chip shortage, this is more an issue of unusually high demand, such as the surge for webcams, monitors, and computers in the global drive to work from home.

Other causes have been attributed to China’s nationwide power shortages, the China-US trade war, and the 2021 draught in Taiwan.

Taiwan is the leader of the global semiconductor industry, controlling more than half the global market share.

Equally, China produced 30 billion semiconductor chips in June 2021 alone, so power shortages across the nation have resulted in significant production interruptions and even factory closures.

As demand for semiconductor chips outweighs the supply, an analysis by Goldman Sachs identified a staggering 169 industries affected in some way.

Amongst the worst affected sectors are automotive, consumer electronics, LEDs & lighting fixtures, and renewable energy sources. A key sector that continues to be affected is the network transceiver industry, with 1G copper technology particularly affected. 

What does chip shortages mean to customers?

This high market concentration, as well as chip manufacturing being a long, complex, and expensive process, leaves no simple solutions.

Prices continue to rise as availability continues to fall. It is unclear when the global chip shortage will end. The International Data Corporation estimate the industry will return to normal by mid-2022, and become oversaturated by 2023, however there is little consensus when it comes to defining a timeline for recovery.

In the meantime, supply issues may worsen and extend to other technologies as chip manufacturers struggle to meet demand. Our customers face extended lead times and higher prices.

What is Approved Technology doing to address the chip shortages situation?

At Approved Technology, we are constantly monitoring the situation and have already taken action to minimise the impact on our customers.

Firstly, we have increased our stock holding to ensure supply on parts with chip shortages, such as our 1G copper technology.

Secondly, we have factored the power outages in China and increased our UK inventory across all our products.

We are working closely with our strategic clients to maintain price stability, or at the very least, to keep price increases to a minimum in the near term to protect the integrity of our customers.

How can we work together?

In navigating the ongoing chip shortage, communication is key to ensure continuity is retained within our supply chain. We must be proactive together to ensure we meet the expectations of the end user, so talk to us!

At Approved Technology we are small enough to care, but big enough to deliver. We are encouraging all our customers to communicate with us on your short and medium term project requirements for us to plan ahead.

Communication with our team is critical when quoting your clients for non-immediate requirements, as we are unable to guarantee pricing without a formal agreement in place. 

Maintaining excellent customer service whilst protecting the bottom line of our customers is our number one priority during this shortage.