Here's one of two stories we emailed August 11, 2021. Sign up for updates directly in your inbox.
The global chip shortage has found its latest prey: consumer tech. Earlier this year, we reported on how this shortage of microchips affected the auto industry (they use computer chips to control everything from engine timing to cabin temperature). As a refresher, without these chips, a number of companies have been unable to make new vehicles. The resulting halt on the supply chain left rental companies — who sold their fleets early in the pandemic — severely short on cars later on, leading to record high car prices.
In April alone, roughly 13% of buyers paid above sticker price for their vehicle. With chip production still limited and prices increasing alongside unrelenting demand, consumer tech executives are now warning of the effects on their products, too.
- Apple says supply constraints on less-advanced chips will affect sales for iPhones and iPads, which use the chips for everyday functions such as decoding audio.
- Microsoft is struggling to make Xbox consoles and Surface laptops. A number of watchlists have emerged simply to alert consumers of which stores suddenly have an Xbox in stock.
- Even smaller companies are now scrambling for parts essential to their products’ functionality, including one San Francisco sex toy seller.
Where do these chips even come from? Over 75% of the world’s chip production happens in Asia, leaving the rest of the world scrambling. In fact, only 12% of global production happens in the U.S. and increasing that capacity is not instant. While the White House has prioritized a plan to expand chip manufacturing, many worry it’ll take years before that investment benefits consumers.
Our Sources:
- Extensive coverage: Recode
- Chip production in Asia: Business Insider
- Federal plans to address shortage: White House