Anyone in this industry should realize the market situation is quite different from the previous years. Today we are going to talk about the underlying causes.
A global microchip shortage is plaguing not only the personal computer making and car production, but also hitting the entire cell phone manufacturing.
Three major causes of the global chip shortage, natural disaster, human factor, and technology.
1. Natural Disater:
COVID-19 drives WFH trends and intensifies the demand for electronic devices, the Japan’s earthquake as well as Texas’extreme weather have affected the production capacity.
2. Human factor:
A fierce arms race and the fallout from US’ trade war, eg. some chip makes which cannot resume normal production because of the US sanction measures, such as SMIC, etc. Major smartphone markers have begun hoarding components.
3. Technology
5G increases semi-conductor demand
Because of all these, the chip shortfall is likely to last for months. And a growing chorus of mobile phone vendors warned in recent weeks they cannot access enough chips to make their products.
“The whole industry is facing challenges including increasing prices of raw materials and even running out of stock. “
—Jiang Xiaofeng, sales director of Umidigi, a Chinese mobile phone company
“There’s a shortage of microchips this year. It’s not just shortfall but severe shortage.“
—Lu Weibing, vice president of Xiaomi group
Experts predicted that chips are likely to remain in short supply over the coming months as demand remains higher than ever.
How to deal with it?
● With the industry cost increased by around 20%, if you have kept enough inventory before the cost increasing, we advise you not to sell at too low pricing, but to keep in line with the current market pricing.
● If you can buy the products at relatively low pricing, we suggest that you stock up a little bit more.
● We are working diligently with our raw material partners to make sure that we are well supplied, and getting the best available pricing, for example, some of our products drop as high as 11%. So while prices continue fluctuating for the immediate future, please keep an eye on us for the most up-to-date pricing information. We update our pricing at irregular intervals.
If you have any questions or concerns, please don’t hesitate to reach out to us. We are always doing our best to serve you and your business!
