From iPhone Shortages To Price Surges, The Global Chip Scarcity Is Affecting Africa

Globally, companies in different fields have been battling chip scarcity.

In Egypt, car manufacturers are experiencing a shortage of electronic control units control units (ECUs), a core chip in a vehicle’s electric system.

In South Africa, Supersonic has been unable to get crucial router components, and so people who signed up for Unlimited Fiber Air Service since February are still waiting to be connected.   

The tech field is still battling with the scarcity of semiconductor chips; a chip important for the manufacture of various tech products. Automotive and consumer hardware companies have been the worst hit. Distributors of Acer products in South Africa – Mustek,  Rectron and Homemation told  ITWeb that the scarcity has led to the shortage in the volume of laptops, tablets, printing and scanning equipment available to the public. For automobile industries, to control the damage, production has been slashed.

Apple is also one of the companies that has also been significantly affected by the lack of this chip, as record has it that it has been one of TMSC’s biggest client. In South Africa, many iStores have had shortages in iPhone stock. This has led to the sale of products above retail price suggested by manufacturers. Head of the Egyptian Association of Automobile Manufacturers, Khaled Sa’ad has this to say: “These are not components domestic car makers can produce, the problem is already putting pressure on car prices domestically, and it is expected to raise prices further”.

That is not far-fetched, as the law of demand and supply in economics dictate that when a product is scarce, then its prices will go high.

U.S investment bank –  Goldman sachs, estimates that the chip scarcity is affecting about 169 industries. This can be traceable to the fact that the chips have become widely used today. Before now, it was only used during the manufacture of personal computers, and mobile smartphones. Today, the semiconductor chip is used in automobile, even washing machines.

There are several factors responsible for the scarcity of the chip; chief of them being that the concentration of the production of the chips in only a few countries. Presently, Taiwan is facing a drought, and they produce a third-quarter of the semiconductor chip. The Taiwan Semiconductor Manufacturing Company (TSMC), alone provides 92% of the cutting-edge chip globally, while Samsung takes the rest. 60% of the chips produced are used by automobile companies. The result is that whenever the chips become scarce, companies have very few options they are left with. The lockdown and post Covid-19 uncertainties, plus the U.S-China trade war also contribute to the scarcity of the chip.

David Kan, CEO of Mustek observes that the ongoing shortage has been the worst he has seen in all his 3 decades of working within the IT Industry.

What are the manufacturers doing to alleviate the situation?

TMSC, Samsung and Intel are beginning to invest toward expansion, to make production faster.

The U.S is looking at investing billions in the semiconductor manufacturing industry so that the shortage is arrested as quickly as possible.

Dedan Kimathi University of Technology in Kenya, Africa is working towards a partnership with an American firm – 4Wave Inc. to launch its first semiconductor factory.

These moves are great ideas. However, the process of implementation may take quite some time; running into years to come to reality.