The Global Chip Shortage and What it Means for the Security Industry

You may have noticed, particularly if you have attempted to purchase an alarm communicator in recent months, that a lot of products are on backorder. This situation is related to the global chip shortage that has recently made headlines for disrupting the automotive industry.

Microchips can be found in just about everything, from ATMs to pacemakers, and in such varied products as smart pens and running shoes. Human beings love to rev up their traditionally low-tech devices in order to improve their usefulness, or at least their perceived usefulness. However, due to the COVID-19 pandemic, the chips required to make some of these improvements are currently in short supply.

The automotive industry was both a cause, and a victim, of the global chip shortage. According to TechRepublic.com, due to COVID-19, automotive manufacturers were required to shut down in 2020 along with most other businesses. But rather than take delivery of the chips they'd already ordered, they decided to cancel those orders. Chip manufacturers were forced to either pivot, or get stuck holding the bag.

Fortunately for them, the shutdown meant that a lot of people were now working and attending school from home. The need for both online access and cloud computing went through the roof, as did the sale of computers, tablets, and laptops. Add to this a huge rollout of 5G smartphones and the folks manufacturing and selling chips were recovering pretty well.

Fast-forward to 2021, the automotive manufacturers have gone back to work, but the chip producers who were forced to pivot away from them have not really been incentivized to do what it takes to increase their supply. To do so would require a major investment in building more foundries for chip production, with no guarantee that they would see the necessary return on that investment. The chip manufacturers seem to be saying, "Poor planning on your part, does not constitute an emergency on our part." So, as long as demand outstrips supply, we're likely to see shortages of any device that requires a chip. Alarm panels, communicators, peripherals such as expansion modules, the list goes on.

Experts in the chip manufacturing industry have provided various estimates as to when the chip shortage may abate. None of those estimates are within 2021. The CEO's of a couple of chip manufacturers, and an automotive industry insider were quoted in Popular Science this past August saying that they expect the shortage to last into 2022, and most likely beyond that, into early 2023. Until equilibrium is reached between supply and demand, expect to wait for some items, and to pay more for others.

Have you been affected by the global chip shortage? Are you waiting for an item that's on backorder? Leave us a comment and let us know how you're dealing with the shortage, or if you're not bothered by it at all. We'd love to hear your thoughts. Drop us a note, start a conversation or just say hello!