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2020 was nothing but a devastating year for all sectors, and it seems 2021 will be no different from last. The Corona virus pandemic affected the production of chips by semiconductors manufacturers, thereby limiting production in the industrial sector. The higher demand and low supply chain constraints by the pandemic resulted in a global chip shortage.
Industry analysts suggested that the automotive industry has taken the biggest hit. Also that the consumer electronics market is expected to move in this direction as well. Meaning that Apple’s iPhone 12 production may suffer as well.
So far, the company has been affected by shortages of both power management chips and LiDAR components. There are also fears that the situation could get a lot worse than it is now.
Though Apple is in a better position than most tech giants. Its size means that it can demand favorable contract terms from suppliers, which often include priority supply and dedicated production lines. There are still limits to what can be achieved.
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Chip shortage duration
Earlier this month, a Microsoft representative said that chip shortages will continue throughout the first half of 2021. This was countered by AMD’s CEO, Lisa Su who warned that this would be the norm during the whole 2021.
However, despite Apple’s dominant market position and the ability to snatch exclusive order supplies from its contractors, analysts think that the smartphone industry as a whole will be affected too but can’t quantify the extends for now.
The lack of semiconductors in automotive industry is said to have resulted in an estimated loss of $61 billion in sales.
Unfortunately, there’s no quick fix to this problem. The fear, however, is that this could be just the start. When chipmakers are working at full capacity, the only way to boost production is to build new production lines or plants, a process that typically takes years.