The smartphone industry is starting to feel the global chip shortage pinch

Chip shortage - pile of semiconductor chips

Until now, phones have mainly dodged the impact of this manufacturing trend due to stockpiles.

The chip shortage that has been affecting the world this year is now starting to make its way into the smartphone industry, after having already affected everything from computers to cars.

The supply issues in semiconductors have resulted from a range of different factors.

The COVID-19 pandemic was the primary cause of many of the factors leading to the semiconductor chip shortage. The main two reasons were that factories were closed due to the spread of the virus, and there was a simultaneous spike in demand for consumer electronics as employees and students around the world were sent home.

That said, the smartphone industry had a stockpile of these components, meaning that it had remained relatively unscathed until now. The industry that suffered the greatest impact from this trend was among automakers. Ford and General Motors both found themselves decreasing or even stopping production of certain vehicles due to the lack of chips. That said, automakers weren’t alone. Video game consoles were also impacted, as the new Microsoft Xbox Series X and the Sony PlayStation 5 were in short supply when compared to the demand from gamers.

Apple, Samsung and other smartphone manufacturers had stockpiled, shielding them from the chip shortage.

That said, even stockpiles eventually run out. Moreover, as they kept up their demand because sales spiked when employees found themselves working from home, meaning that they needed more but were receiving less, depleting their stockpiles over time.

Furthermore, even as auto sales dipped because people simply weren’t driving during the pandemic as they had been before, the auto industry doesn’t typically use the same chips as smartphones, meaning that they are not necessarily interchangeable. Automakers usually use larger, older chips, while smartphone makers aim for the very latest in processors.

Since smartphone companies purchase far more chips than the automotive industry, phone manufacturers remained a priority customer. This shifted the availability of Chip shortage - pile of semiconductor chipsthe components in the favor of the handset makers and away from the automotive sector. However, even after all that, the chip shortage is now reaching mobile manufacturers. This is particularly true as the automotive and other sectors are starting to catch up with their capacity once again.

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