EN ENWhen the Playstation 5 was released in Europe last November, it became unavailable within a few weeks. It has been since the last months of 2020 that the microchip shortage began to affect global production. Today, nine months later, the shortage of processors has become endemic and purchasing any electronic goods has become complicated, whether it’s cars or graphics cards.
On one hand, the problem is due to high demand. Nowadays, any product with electronic components uses these microscopic circuits to function: from processors for weighing clothes in washing machines to camera sensors, microchips are ubiquitous in the objects around us and demand has been steadily growing for years. The pandemic has further favored this trend. Lockdowns and the spread of remote working have made the need for computers, smart TVs, and home entertainment systems more urgent.
On the other hand, some circumstances have made it more difficult to maintain or increase production. The pandemic has also caused the temporary closure of some factories and a general slowdown in the supply chain, while the trade war between the United States and China has made trade with China more difficult and triggered a general hoarding of microchips by Chinese companies in 2020, before American sanctions took effect. Other adverse events, such as a fire at a major Japanese microchip factory last October, the snowstorm that blocked production plants in Texas this winter, or the severe drought that hit Taiwan in recent months have further aggravated the situation.
The consequences of this shortage on the tech industry are significant. According to Reuters, several major car manufacturers have been forced to cut their planned production for 2021 (Stellantis by 11%, for example). Meanwhile, the world’s leading smartphone manufacturer, Foxconn, will likely see its annual production reduced by 10%. A large company like Whirlpool has stated that it managed to meet only 90% of demand in March, and Nvidia already announced in April that demand for its graphics cards will continue to outstrip supply until 2022. Overall, the affected sectors have lost a significant portion of sales during this phase.
The difficulties in microchip production make it impossible to quickly scale the process and build new factories in a few months. The situation will therefore take a few years to resolve.
But while it is understandable that the particular conjunction of unfavorable events has had significant repercussions, it must also be noted that the main cause of this crisis was the poor understanding of medium-term demand trends.
A sophisticated predictive model, based on data and developed through Artificial Intelligence, could instead help, even in complicated contexts, to develop a more effective and realistic long-term strategy.
A large amount of data, processed by algorithms capable of learning and constantly improving, can result in more accurate and objective forecasts.
Do you also want to implement a predictive system to make your company’s production more efficient with artificial intelligence? Contact us at info@aidia.it or by filling out the form in the contact section to schedule a free consultation and understand how AI can help you make your company’s production more efficient.
Marketing Specialist at AIDIA, graduated in International Studies in Florence, passionate about history, economics, and the bizarre things of the world.
At Aidia, we develop AI-based software solutions, NLP solutions, Big Data Analytics, and Data Science. Innovative solutions to optimize processes and streamline workflows. To learn more, contact us or send an email to info@aidia.it.
