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Why is the world facing a chipset shortage in 2021?

Whenever we think of chipsets, we tend to associate them with smartphones, but that is not the reality. Every electronic device we use has semiconductor chipsets in it. From the rise in smartphone prices, supply shortage of home appliances to delayed delivery of cars are because of this unexpected shortage of semiconductor microchips. 

Recently Samsung Electronics has suspended the production of their flagship smartphone because of this shortage. The root cause of the shortage is an amalgamation of many factors as car manufacturers closed their plants last year amidst the coronavirus pandemic. They now are competing against the booming industry of consumer electronics for microchip supplies. 

During the pandemic, the electronic industry experienced a huge demand as consumers stocked up mobile phones and laptops. The automobile industry also experienced a higher demand of cars than expected, which further tightened the supply. 

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Automobiles being the first affected industry, the shortage has now spread across many other electronic sectors like smartphones, air conditioners, microwaves etc. This shortage caused manufacturers to stock up their supplies, which has resulted in a price hike of even the cheapest components of chipsets leading to an increased price of final products. The demand for 5G phones increased rapidly and the manufacturers struggled to increase the production. 

Tech giants like Qualcomm and Foxconn have warned their clients about microchip shortage, which has affected their supply line. Majority of the chipset manufacturing is done in Asia by companies like Samsung and Taiwan Semiconductor Manufacturing Co. Ltd.

Companies that produce chipsets are extremely expensive to build. Expanding their existing production capacity is equally hard as it includes induction of many complex hardware, which is very time consuming.. Experts say that it could take more than a year to successfully expand the chipset manufacturing industry. Joe Biden, the President of the US has announced $37 billion to fund the execution of expanding microchip manufacturing in the country. China is also offering subsidies to local companies to develop machineries in order to reduce its dependence on western technologies. 

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Dipayan Mitra
Dipayan Mitra
Dipayan is a news savvy writer, who does not leave a single page of news paper unturned. He is also a professional vocalist who enjoys ghazals. Building a dog shelter is his forever dream.


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