Why the scarcity of a $ 1 chip created a crisis in the global economy

Why the scarcity of a $ 1 chip created a crisis in the global economy

The trouble for the chip industry — and increasingly companies beyond tech, like automakers — is that there aren’t enough display drivers to go around. Firms that make them can’t keep up with surging demand so prices are spiking. That’s contributing to short supplies and increasing costs for liquid crystal display panels, essential components for making televisions and laptops, as well as cars, airplanes and high-end refrigerators. “It’s not like you can just make do. If you have everything else, but you don’t have a display driver, then you can’t build your product,” says Stacy Rasgon, who covers the semiconductor industry for Sanford C Bernstein.

To understand why the $450 billion semiconductor industry has lurched into crisis, a helpful place to start is a one-dollar part called a display driver. Hundreds of different kinds of chips make up the global silicon industry, with the flashiest ones from Qualcomm Inc and Intel Corp going for $100 apiece to more than $1,000. Those run powerful computers or the shiny smartphone in your pocket. A display driver chip is mundane by contrast: Its sole purpose is to convey basic instructions for illuminating the screen on your phone, monitor or navigation system. Now the crunch in a handful of such seemingly insignificant parts — power management chips are also in short supply, for example — is cascading through the global economy. Automakers like Ford Motor Co, Nissan Motor Co and Volkswagen AG have already scaled back production, leading to estimates for more than $60 billion in lost revenue for the industry this year.

The situation is likely to get worse before it gets better. A rare winter storm in Texas knocked out swaths of US production. A fire at a key Japan factory will shut the facility for a month. Samsung Electronics Co warned of a “serious imbalance” in the industry, while Taiwan Semiconductor Manufacturing Co said it can’t keep up with demand despite running factories at more than 100% of capacity. “I have never seen anything like this in the past 20 years since our company’s founding,” said Jordan Wu, co-founder and chief executive officer of Himax Technologies Co, a leading supplier of display drivers. “Every application is short of chips.”

The chip crunch was born out of an understandable miscalculation as the coronavirus pandemic hit last year. When Covid-19 began spreading from China to the rest of the world, many companies anticipated people would cut back as times got tough. “I slashed all my projections. I was using the financial crisis as the model,” says Rasgon. “But demand was just really resilient.” People stuck at home started buying technology — and then kept buying. They purchased better computers and bigger displays so they could work remotely. They got their kids new laptops for distance learning. They scooped up 4K televisions, game consoles, milk frothers, air fryers and immersion blenders to make life under quarantine more palatable. The pandemic turned into an extended Black Friday onlinepalooza.

Automakers were blindsided. They shut factories during the lockdown while demand crashed because no one could get to showrooms. They told suppliers to stop shipping components, including the chips that are increasingly essential for cars. Then late last year, demand began to pick up. People wanted to get out and they didn’t want to use public transportation. Automakers reopened factories and went hat in hand to chipmakers like TSMC and Samsung. Their response? Back of the line. They couldn’t make chips fast enough for their still-loyal customers. Himax’s Jordan Wu is in the middle of the tech industry’s tempest. On a recent March morning, the bespectacled 61-year-old agreed to meet at his Taipei office to discuss the shortages and why they are so challenging to resolve. He was eager enough to talk that interview was scheduled for the same morning Bloomberg News requested it, with two of his staff joining in person and another two dialing in by phone. He wore a mask throughout the interview, speaking carefully and articulately.

The News Highlights

  • Why the scarcity of a $ 1 chip created a crisis in the global economy
  • Check the latest world news updates and information about business, finance, technology and more.
  • Check the latest update on tech news
Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
Hockey player claims she was banned after telling coach about mental health issues – Chicago news

Hockey player claims she was banned after telling coach about mental health issues – Chicago news

“They can’t (ban her). She didn’t break rules, she didn’t violate any procedures,” attorney Charlie Wysong says. “It’s really cut and dry.” Because of this, ...
Shocking Okinawa Drink Recipe Truth Exposed [Update]

Shocking Okinawa Drink Recipe Truth Exposed

News Highlights Las Vegas, NV, April 22, 2021 (News) — Okinawa Flat Belly Tonic is a supplement that  triggers weight loss by reducing inflammation  and ...
Multiplayer in free games on Xbox no longer requires gold

Multiplayer in free games on Xbox no longer requires gold

Source Xbox Live Gold is a paid subscription service for the Xbox community that began with Xbox 360 console. In order to play online in paid games and access ...
Rockwell Medical Presents Data on Diagnosis and Management of Iron Deficiency Anemia in Home Parenteral Nutrition Patients at the NHIA 2021 Annual Conference Nasdaq:RMTI

Rockwell Medical Presents Data on Diagnosis and Management of Iron Deficiency Anemia in Home Parenteral Nutrition Patients at the NHIA 2021 Annual Conference Nasdaq:RMTI

News Highlights WIXOM, Mich., April 22, 2021 (News) — Rockwell Medical, Inc. (Nasdaq: RMTI), a biopharmaceutical company dedicated to transforming the ...
Everything about Samsung’s new product

Everything about Samsung’s new product

Samsung unveiled the Galaxy S20 FE and the gadget is certain to show loads of heads. With stiff competitors within the mid-range market, it is clear that ...
Beware of schemes that ask for money to prove that you own your home

Beware of schemes that ask for money to prove that you own your home

Better News Bureau warns of scam company claiming to operate out of Greenville Instead of sending the money, Shaprio paid a visit to the Jackson County ...
Verizon’s Samsung Galaxy Note20 series with camera features

Verizon’s Samsung Galaxy Note20 series with camera features

Here’s the full changelog of the new update for the Note20 duo: The Samsung Galaxy S10 locked to Verizon’s network recently got a new software update which ...
Games for the Oculus Quest 2 are already being updated to run at 120Hz.

Games for the Oculus Quest 2 are already being updated to run at 120Hz.

While the Superhot VR developers seem to just be contemplating the move to 120Hz in the future, Cubism developer Thomas Van Bouwel says that he’s working on ...
Show next
Compsmag - Latest News from tech, business and health
Logo