The Effects of Chip Shortages on the LCD Industry

You may not be aware of it, but the chip shortage on a global scale can create major real-world issues. With the advent of modern tech solutions, chips are now applicable to cars, toothbrushes, and computers.

In fact, the high demand for semiconductor chips continues to impact global supply. Not to mention many industries are already experiencing the pinch. On the flip side, countries like China continue to face sanctions for stockpiling chips in the face of extreme shortages.

CHIP SHORTAGE IMPACTS MULTIPLE INDUSTRIES

The shortage of chips in the auto industry was just the starting point. You can tell that the situation is dire when even Samsung decides to ditch its LCD business. In fact, any device utilizing LCDs will also be affected by this shortage.

It is a systematic approach that makes it difficult for companies to obtain chips. It is no wonder Intel has decided to spend $10 billion on an exclusive chip plant in Europe. With an extreme global shortage of chips, the LCD industry bears one of the heaviest burdens.

It is no longer a secret that a shortage would inevitably impact more than one industry. It would be fair to state that this trend would also create supply chain issues that might be difficult to resolve in the future.

CHIP SHORTAGE AND COVID-19 PANDEMIC CRISIS

There are several factors that have led to the severe shortage of chips around the world. When it comes to supply constraints, a major catalyst this past year has been the COVID-19 pandemic crisis.

The lockdowns brought on by this crisis had caused many manufacturers to temporarily shut down. With the increasing amount of products incorporating LCDs and many productions lines down, it has become more difficult to meet the rise in demand, causing endless disruptions within supply chains. As more manufacturers are unable to boost production, there will be an even more dire need for chips.

It is important to note that there are no major investments in the new production of straightforward chips such as ICs. Therefore, if demand continues to grow, the current supply of chips will not be able to meet production.

LCD manufacturers have become more cautious with using their existing resources. Ultimately, the severe scarcity of chips will continue to increase the price and lead times of LCD production.

WHAT’S THE SOLUTION?

The ideal solution would be to offset costs or opt for an additional revenue stream for your business. But the truth is that there is only so much one can do to resolve the global shortage of chips. Analysts predict that the current shortage of chips will continue to worsen.

Many industries are already lobbying the federal government to subsidize the production of state-level manufacturing sites. Most semiconductor manufacturing companies have decided to increase their spending capital and budget to increase the production of chips.

Going forward, companies will need to be more vigilant with their sourcing and properly assess the market to determine when to order materials. So, if your product contains an LCD with an IC, make sure to place orders earlier to avoid long lead times.

There is a good chance that prices will continue to fluctuate for the foreseeable future. In retrospect, tech firms should pay close attention to the changing dynamics and trends of the market to maintain their competitive edge.

REFERENCES: