The global shortage of semiconductor chips for electronics threatens the supply of AV equipment in training rooms, conference rooms, and even at-home office equipment. While the worldwide shortage began in the spring of 2020, the impact still reverberates into the AV industry in 2023.
We can attribute the shortage of semiconductor chips to issues with the global supply chain and increased demand for electronic products. Fortunately, the US is implementing new policies to mitigate these supply disruptions, and the AV industry is adjusting to the growing need for semiconductor chips. By understanding this need, your organization can make the right decisions in light of global shifts.
What is a Semiconductor Chip?
A semiconductor is a material that is made of silicon. Silicon conducts greater electricity than an insulator but less than a material such as aluminum or copper. Sometimes referred to as integrated circuits (ICs) or microchips, these conductive materials are found in nearly everything electronic today. From computers to automobiles, medical equipment, or smartphones, you’d be hard-pressed to find a modern device that isn’t utilizing semiconductors.
What is the Global Chip Shortage?
From 2019 to 2021, the demand for semiconductor ships rose by 17%. However, the world’s primary semiconductor chip manufacturers could not meet growing demand.
Chip manufacturers in South Korea, Taiwan, and China currently operate at 90% of their production capacity. These manufacturing issues have created a “supply bottleneck,” in which the volume of chips produced is insufficient to meet demand.
Bottlenecks of this scope are challenging to manage, primarily when Taiwan controls 65% of the world’s semiconductor foundry market. Due to this, no competing chip manufacturers can meet the increased demand for semiconductor chips. Additionally, manufacturers face difficulties managing the scarcity of materials and rising production costs.
What is Causing the Global Chip Shortage?
Contrary to popular belief, there is no singular cause of the global chip shortage. Instead, several factors contribute to the worldwide chip shortage. Leaders in the AV industry must consider the following issues when navigating the market amid production issues.
Supply Chain Issues
Supply chain issues currently impact many sectors, including the AV industry. A drastic reduction in manufacturing and shipping causes supply chain issues with semiconductor chips. These issues arose due to the pandemic when manufacturing companies shut down.
Increase in Remote Work
The increased demand for semiconductor chips began shortly after the lockdown in 2020, when organizations implemented a remote work model. This remote work shift required employees and companies to purchase new home office equipment. Meanwhile, others purchased home entertainment devices. Consequently, the demand for chips was more significant than the availability in the market.
Hybrid Office Upgrades
While employees improved their home office setups, companies also upgraded their AV infrastructure to accommodate a hybrid working environment. However, with AV upgrades comes an increased demand for high-quality AV equipment and professional installations. As expected, the semiconductor industry could not meet such high demands due to decreased manufacturing and shipping.
How the Chip Shortage is Affecting the AV Industry
No matter how large or small, each piece of equipment in an AV setup requires at least one semiconductor chip. As a result, the global chip shortage of semiconductors and other essential equipment has caused shipping delays and price increases for AV equipment.
Manufacturing semiconductor chips is quite complex, and the entire process may take up to 26 weeks from start to finish. Although industry leaders state that the global chip shortage will subside as production increases, AV professionals must monitor this situation.
Another cause of chip shortages in the AV industry is that chip manufacturers do not consider the AV industry high-priority. The most significant portion of revenue for chip manufacturers comes from mobile devices, laptops, and other entertainment devices, so these industries are the first priority.
To mitigate the effects of the global chip shortage, companies in the AV industry are diversifying their supply chains, enabling them to meet customer demands with minimal delays.
How the CHIPS Act Benefits the AV Industry
Experts state that the global chip shortage will continue in 2023, but there are still ways for the AV industry to thrive in trying times. Leaders in the AV industry are working to manage supply chain issues by coordinating with chip manufacturers to ensure the availability of critical AV equipment.
On August 9, 2022, the US signed the CHIPS Act into law to bring semiconductor chip production to the US. The CHIPS Act also has the following benefits for organizations utilizing semiconductor technology.
Increased Production in the United States
Currently, the United States only produces 12% of the global semiconductor supply. However, production is expected to increase in the years to come. By relocating chip manufacturing to the United States, global conflicts and COVID-19 restrictions are less likely to disrupt the supply chain. Additionally, bringing chip manufacturing to the United States reduces the strain on other countries to manufacture our semiconductor chips.
Companies Will Have More Oversight
Since many US-based companies continue to manufacture their semiconductor chips overseas, leaders need help managing the production process. However, US-based manufacturing companies can ensure a smooth design process with a quicker turnaround time and fewer production errors.
Companies Can Adjust Factory Production
Although the world is struggling amid the global chip shortage, the AV industry will adjust in time. As the market corrects itself, the demand for semiconductor chips will fall. US-based manufacturing companies can utilize their facilities to manufacture other products. Furthermore, factories can manufacture other products in emergency situations.
Work with AV Industry Leaders at Applied Global
Although the global chip shortage persists, AV industry leaders are adept at navigating challenges and delivering dynamic solutions. If your organization is seeking assistance from AV specialists, Applied Global Technologies (AGT), offers various AV solutions to improve workplace productivity. Our team has the tools and expertise to help your business make the most of its shared office space.
To learn more about our AV solutions, contact us today. We’ll be happy to discuss your specific needs and recommend the right solution for your business and budget.