It’s impossible to get a PS5, your iPhone is on backorder, and no one’s seen a graphics card in the wild in months. It seems like no matter what kind of electronic gadget you’re looking for, it just can’t be found. What in the world is going on? The short answer is a global chip shortage caused by a confluence of factors ranging from the ongoing pandemic to geopolitical tension and, as always, some crypto nonsense.
The long answer is … complicated.
It’s easy to put it out of your mind most days, but every device you own—including the one you’re using to read this article—is made up of dozens of specially designed microprocessors that require even more specialized factories to manufacture them. That was already a complicated process to maintain, but when the pandemic hit in early 2020, it threw a metaphorical wrench in the very literal gears.
The rise in working from home correlated with an increasing need for more devices. Tellingly, webcams were almost immediately out of stock as millions of people shifted their meetings to video chats and wanted something that looked better than their laptops’ built-in webcams. Similar pressures to buy new laptops, phones, tablets, headphones, and dozens of other devices put a strain on microprocessor supply. At the same time, demand for cars—which also require dozens of built-in electronics—dropped in early 2020.
Factories that manufacture microprocessors don’t turn on a dime. Since most chips require highly specific manufacturing processes, it can take weeks or even months to get a workflow in place to start filling the demand for certain parts. It takes time for a factory that was, until recently, mass producing touchscreen displays for new cars to pivot toward making screens for iPads.
Put simply, it’s hard to nimbly keep up with electronics demand even in a normal year, and 2020 was the furthest thing from normal. The pandemic also isn’t over. Taiwan had until recently been largely free of Covid cases, but a sudden, exponential uptick could, according to a Taiwanese representative, eventually cause “logistical problems” if the country doesn’t get access to more vaccines.
Taiwan’s manufacturing accounts for more than 60 percent of global semiconductor revenue. In other words, the majority of processors used in electronics worldwide come through Taiwan. With an increase in demand for certain devices, a sudden, intense shift in which kind of devices consumers need, and increasing pressure to stay operational during a pandemic, shortages were bound to happen.
Perhaps even more predictably, prices for semiconductors are starting to rise to match that demand. Not only is it hard to get enough of some devices, but soon it might be more expensive as well. Which only exacerbates the next problem.
Deconstructing the complex nature of international trade disputes is a bit beyond the scope of a single explainer article, but what we can say for sure is that it’s not simply a matter of higher demand that makes getting processors harder. Having the vast majority of the world’s semiconductor manufacturing based on a single continent has never been ideal for other countries. And the US in particular hasn’t always played nice.
In late 2020, shortly before leaving office, President Donald Trump put restrictions in place on Chinese manufacturer SMIC. This led, in at least one case, to an automaker moving microprocessor manufacturing to Taiwan, which only made Taiwan’s manufacturers even more overloaded. In a way, the move was an extension of the Trump administration’s feud with Huawei, which in turn was an extension of the United States’ much more complicated relationship with China’s position in the global economy.
The current Biden administration has pledged to invest in US-based semiconductor manufacturing that wouldn’t be as vulnerable to international trade disputes, but even if those plans materialize, it will take years to materialize. For now, the simplified version of a complicated issue is that meeting demand for chips was already a tough challenge. Geopolitical superpowers duking it out for economic dominance doesn’t make it any easier.
Most electronics have been even harder to get since the pandemic started, but graphics cards have been a pain to get your hands on for even longer. And the reason isn’t some complex system of international needs and crises, but rather something much more mundane: dudes wanting to get rich on the internet.
Graphics cards rely on highly specialized processors that can crunch data with the kind of efficiency that makes highly realistic, 3D gaming possible. That specialization also happens to be really good for anyone who wants to mine cryptocurrencies like Bitcoin or Ethereum. Miners will often buy as many graphics cards as they can, string them up together, and start generating digital currency that they can then trade for real money. It’s an intense and complicated process that few people are actually equipped to do, but for those who are able, it can be extremely lucrative.
The only problem (well, aside from how disproportionately cryptocurrencies negatively affect the earth’s climate) is that this doesn’t leave many graphics cards for people who just want, you know, to play video games. The problem has gotten so bad that chipmaker Nvidia has started nerfing some of its new graphics cards so that they’re still good at video games, but not as great at mining. The hope is that it will drive away miners, but keep the gamers.
However, the graphics card shortage isn’t entirely unrelated to the larger global chip shortage either. Demand for graphics cards has increased just like everything else, and there are only so many factories that can make parts around the world. If you’re having a hard time getting a graphics card, new phone, PS5, or even a car, there are complex global problems constraining the entire electronics industry that are getting in your way. And also crypto bros.
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