What’s this ‘chip shortage’, and why are second-hand cars so expensive right now?

Have you been shopping around in the used car market recently? Or have you tried to pick up a new monitor? You may have noticed a price increase, or lack of stock availability in the case of most computer equipment.

If COVID-19 hadn’t left its mark on the world already, another of its lasting legacies may be used car price inflation. The global pandemic has flowed on, affecting the current global Semiconductor (and resulting Integrated Circuit) or ‘chip’ shortage. Prevalent in much of today’s technology, this tiny piece of hardware was, until recently, readily accessible. In some cases it was even suffering from an oversupply problem. The slowed production of these little ‘chips’ is now driving used car market prices up.

What has caused this ‘chip shortage’?

The biggest reason for the forced closures of chip manufacturing plants is lockdowns in both Taiwan and China (China’s plant lockdowns having less of an impact due to recent US trade restrictions on their biggest chip manufacturer). Global reduction in chip output paired with a simultaneous increase in demand has led to a huge backlog. A push for WFH, causing increased demand due to the very same lockdowns.

What industries will be affected?

Cars require a vast number of these chips to power all of their onboard electronics. Which has meant many automakers have had to scale back production in line with chip supply levels. As a result, used car prices have escalated. Consumers in need of a vehicle have found themselves with waiting periods of months for a new car. To find their new vehicle many have turned to the used car market.

This has also caused a massive headache for technology resellers and partners. Channels are unable to meet rising customer demand for hardware devices. A result of many more people looking to update or enhance their WFH setup. In some cases, to meet customer demand for new computers or monitors, resellers are purchasing from brands or channels they normally wouldn’t.

Unfortunately, it’s impossible to predict when the chip shortage will end. At this stage however, it looks like there will be at least another year of restricted supply. Even when chip production does stabilise, demand backlogs and lengthy supply chains will take time to catch up to any changes.

Let us know if you need support.

Over the next year, if you find yourself in need of computer equipment for your business or your team’s WFH setup, you may have trouble locking down stock at your local IT retailer or online. In this case, get in touch with the Altitude Innovations team. We may be able to give you more options through our extensive channel partnerships.

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