What are IT Managers doing to tackle the chip shortage crisis?

Industries around the world are facing challenging times as a result of the chip shortage crisis.

This ongoing global crisis takes place in the middle of a Pandemic where users of computers, laptops, video games and other devices increased faster than the growth production of semiconductors.

What is happening in the world with the chip shortage?

The chip shortage has been caused by many factors. One of the most important and evident is the Covid-19 pandemic, which generated a high demand for computing devices.

With the pandemic, the market priorities changed. Consumers and businesses started to invest in technology to adjust to the new world requirements: studying and working from home and getting access to essential services and entertainment.

According to the Semiconductor Industry Association, Global semiconductors sales increased 6.5% in 2020, demonstrating growing demand for chips across a variety of end markets.

The demand for these computing devices grew faster than the production of semiconductors, which are the chips used in every modern electronic system. In addition to that situation, due to lockdowns in China, there were production disruptions since Q1 of 2020.

The main chip manufacturers are concentrated in Southeast Asia. About three-quarters of all chips worldwide come from China, Japan, South Korea, and Taiwan; and more complex and advanced semiconductors production is practically limited to South Korea and Taiwan.

In a special report about Global PCs shipment made by Canalys, the total shipments of desktops, notebooks and tablets in the world increased 17% in 2020 compared to 2019, reaching 458 millions of units. However, during the Q1 and Q2 of 2020, Latin America had a notorious depression of PCs shipments, despite high demand of these devices, due to the low priority given by OEMs to the region.

Regarding Smartphones, the overall worldwide sales growth year over year is 22%. In the first Quarter of 2021, worldwide sales Grew 26% according to Gartner Inc.

It is expected that the global chip shortage will keep impacting many industries, and it may result in an increase of the selling price of electronic devices globally.

How is the chip shortage impacting different industries across the world?

The global crisis of the chip shortage is not only affecting the tech and automotive sectors but is also hurting other industries at some level.

This crisis touches 169 industries according to an analysis by Goldman Sachs (GS). 157 industries in the manufacturing sector; 5 industries in the information sector; 3 industries in the wholesale trade sector; 2 industries in the professional, scientific, and technical services sector; all other retail sector; and other services sector.

Industries hit by the chip shortage in this analysis, spend more than 1% of their GDP on chips. As a benchmark, in the automotive sector, 4.7% of industry GDP is spent on microchips and related semiconductors.

There are many predictions about how long this crisis will last. Some of them estimate a return to normal in 2023, and the most optimistic ones are betting on the second or third quarter of 2022.

Gartner Inc. states that it is expected to recover to normal levels by the second quarter of 2022.

However, it is worth to mention that the recovery time of this crisis might be longer for the Latin American continent, as it is not a high priority region for the OEMs.

What are IT Managers doing to tackle the chip shortage crisis?

IT Managers are reducing the purchase of devices with semiconductors and instead they are implementing preventive maintenance to their existing hardware.

Through this strategic and special maintenance, they are not only taking care of machines the company already has invested in, but they are also monitoring their life cycles to manage the obsolescence of the components effectively.

Preventive maintenance for company hardware

Preventive maintenance means two important things for companies and decision makers: low investment and maximization or extension of the useful life of electronic devices.

It prevents irreparable damage to the equipment, reduces unnecessary repairs and costs, and guarantees that the equipment is calibrated according to the manufacturer’s standards.

The preventive maintenance consists of 3 important parts: Performance inspection, performance validation, and diagnosis and cleaning to make the most of the potential of the hardware.

As a result, organizations could increase the lifespan of end user devices by at least 33%. Therefore, IT Managers are handling the crisis and at the same time maximizing the investment of the company while production returns to normal.

Laptops and Desktops, Ink and Laser Printers, VOIP Phones and Projectors are electronic devices that can be part of preventive maintenance.

Conclusion

The global chip shortage is an ongoing crisis accentuated by the Covid-19 pandemic. The growth production of semiconductors in the world is not attending the demand of users for electronic machines.

In the most optimistic scenario, the chip shortage will go from severe in 2021, to normal after the second quarter in 2022. However, Latin America will see the results of this process later, as it is not a high priority region for manufacturers.

On the other hand, IT Managers are already saving costs keeping their organizations productive with preventive maintenance. With this simple process they are extending the useful life of the equipment and guaranteeing ideal performance of the machines year after year.

The results of the preventive maintenance are not only evident in the performance of machines itself, but also in the company’s output, avoiding production stoppages and downtime as a result of unexpected repairs. It is also becoming a way of extending the warranty of an organization’s infrastructure.

Finally, it is helping to mitigate environmentally negative consequences of the global chip shortage with the massive production of semiconductors to meet the high demand of devices.

If you want to extend the lifespan of you end user devices, Netser Group can help you with flexible contract options.

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