A shortage of semiconductors is slowing down iPhone 12 production, along with many other electronics and vehicles, according to Bloomberg.
Semiconductors are the key component of almost all electronic devices we use daily, from TVs and cars to smartphones. Until the spring of 2020, the supply and demand of semiconductors seemed perfectly synced. Then came the pandemic, and things have been off the tracks since then.
When the pandemic started, the demand for semiconductors plunged and decapitated production. Then was the impact of the first lockdowns that took away factory workers from their workplace.
However, once the dust settled down and the world started adjusting to the new reality, the demand was back. But this time, the demand soon outgrew the original pre-pandemic levels and even further pushed manufacturers to scale up their production output.
Schools turning to distance learning, home office replacing the work office, the increased demand for electric vehicles – all that skyrocketed the demand for electronic devices of any kind.
But at that point, production facilities were working under new health protocols that required social distancing between factory workers. That, along with logistics problems, made scaling up production nearly impossible.
According to Alix Partners, the auto industry felt the shortage of semiconductors on their books as it wiped out $61 billion worth of sales. Many experts believe that by the end of the pandemic, that number will be much higher for the auto industry.
The smartphone industry is also feeling the pressure from the semiconductor shortage
Cristiano Amon, the CEO of Qualcomm Inc., reported shortages “across the board.” According to Qualcomm and big chipmakers such as Infineon Technologies AG and NXP Semiconductors NV, the semiconductor shortages are no longer constrained to the auto industry. They hinted that 5G-enabled smartphones such as the iPhone 12 might be the next product to be affected by this shortage.
Qualcomm, a long-time partner of Apple, said that the industry relies on only a handful of Asian players that are already at capacity while demand steadily grows.
Experts believe that increasing the capacity of production lines is the only way to solve it. The process usually takes years. That means there is no quick solution, and the shortages will continue throughout 2021.
Neil Mawston, an analyst at Strategy Analytics, estimates that key smartphone component prices for chipsets have increased by about 15%. He attributes much of the increase to the shortage of semiconductors, driven by an unexpected huge demand.
Even though Apple is ideally positioned with big-time players in the industry, such as Qualcomm, they remain concerned that the shortage may eventually impact its sales.
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