A perfect storm of adverse events and increased demand has created a shortage among the world’s leading suppliers of semiconductor microchips. Every day, news sources feature articles talking about this chip shortage and how it’s hampering the production of everything from home appliances to PCs to autos. This shortage is also having an impact here at Umbrella as we work to meet the hardware needs of our clients.
What caused this chip shortage?
As mentioned, these semiconductor microchips are used every day in every electronic device that we interact with. This includes computers, smartphones, tablets, appliances, cars, and much more. The need for these chips in electronics manufacturing is essential and the demand has always been high. However, over the past 15 months, the world has changed and the Covid-19 pandemic, sanctions, and panic buying have fueled shortages, manufacturing delays, and higher consumer demand.
The Covid-19 pandemic worked two-fold to impact production and deplete chip inventory. Like the rest of the world, chip manufacturers were forced to close factories at the start of the pandemic. This interrupted production, and vendors quickly went through their inventory.
On top of that, the lockdown closed offices, and socializing came to a halt; people were forced to spend most of their time at home. This led to a surge in the purchase of new laptops, tablets, and other web-connected electronic devices to compensate for the lack of physical socializing and activity. This spike in demand combined with low chip inventory created a deficit of chips for companies like Dell, Apple, and Samsung. Within the first 60 days of lockdown, vendors had incredibly low inventory levels and, with chip production shortfalls, started experiencing major delays in electronics production despite the demand. Today, experts predict that the demand for PCs will continue to surge another 18% throughout the remainder of the year.
Unrelated to the pandemic, other factors impacted the chip shortage. US sanctions on Chinese technology changed the way US and US-ally manufacturers procure chips. These tighter restrictions have made it harder for electronics manufacturers to meet their semiconductor needs. To make matters worse, many companies have resorted to panic buying, further worsening the shortage. Finally, to add salt to the wound, extreme weather conditions have created global delays with shipping chips out.
How the shortage impacts Umbrella’s Clients
With the chip shortage estimated to last through the end of 2021, Umbrella is working closely with our vendors to meet the demands of our clients. As the shortage continues, there are a few things you should keep in mind:
- In urgent or emergency cases we have been able to procure business-class PCs and hardware in a timely manner. Vendor inventory for some of the most common hardware like desktops, laptops, and some key networking equipment is exceptionally low, but not completely depleted.
- In the case of replacing multiple PCs, especially laptops, we have been able to locate product but have experienced delays as inventory sells out rapidly. Vendors are receiving small batches of inventory from manufacturers, but they are all being purchased as quickly as they come in. Normally when inventory is readily available, PCs ship within 3-5 days after purchase. With current low inventory and shipping delays, we are now seeing shipping times of around 15-30 days, and for custom built machines, closer to 30-60 days.
- Network hardware for office moves, infrastructure upgrades, or other similar projects has been available but shipping times may be delayed. With the current queue of projects, the good news is we have had no serious issues getting hardware in-house in time to start work.
How can I help minimize delays with my hardware?
Hardware is still being produced, just arriving at a much slower rate. Here are a few ways you can help ensure we get your hardware procured and in house in a timely manner:
- Let your Client Services Coordinator (CSC) know of any upcoming office moves, large projects, or big PC orders. This will allow us to prepare a quote and locate vendors with the most inventory.
- Review and approve quotes in a timely manner. The low levels of inventory are moving fast so the quicker we get the signed quote, the faster we can process and procure your hardware.
- In cases of custom PCs or larger PC orders, please allow extra time for us to procure and receive this hardware. These are where we are experiencing the greatest delays.
- The Design Desk is doing an excellent job of keeping clients in the loop and working with them in cases where hardware models need to be adjusted or changed.
- Please note that with limited supply and increased demand, the cost of hardware has increased.
We are here to serve you and we’re doing our best to work through the challenges created by this chip shortage.
Questions? The help desk team is here to answer them.