The 10 Biggest News Stories Of 2021

5. The Global Chip Shortage Wreaks Havoc On Multiple Industries

IBM CEO Arvind Krishna believes that predictions of a resolution to the industry-wide semiconductor shortage by the end of 2022 are overly optimistic, saying at The Channel Company’s Best of Breed Conference in October that he thinks it’s “more likely” that chip production and supply chain problems won’t be fully solved until 2023 or even 2024.

Earlier at the same conference Daniel Newman, founding partner and principal analyst Futurum Research, was a bit more optimistic when he said semiconductor supply should catch up with demand in late 2022.

Either way it’s clear that the global chip shortage that began in 2020 and had a major impact on a wide range of industries and companies this year isn’t ending any time soon.

Why the shortage? Some chip manufacturing facilities shut down as the COVID-19 pandemic took hold. Former President Trump’s trade war with China barred companies from making chips there. And with microprocessors being built into so many products, from consumer electronics and appliances to automobiles and IT systems, demand has soared even as semiconductor companies compete for capacity at contract manufacturers like Taiwan’s TSMC.

The shortage has particularly hit IT system and device makers and the channel partners who sell their products. In October Apple CEO Tim Cook stunned industry analysts when he said the company took a $6 billion revenue hit in its fiscal 2021 fourth quarter – with the chip shortage largely to blame – and said the impact on the fiscal 2022 first quarter could be even greater.

Intel in October said that to cope with the semiconductor shortage the company was discontinuing more than 30 Ethernet controller and adaptor products for servers, citing the need to allocate available chip supplies to Ethernet products that sell in higher volumes.

Intel CEO Pat Gelsinger in July warned that chip supply shortages would continue for at least several more quarters and that it might be one to two years before the industry could completely catch up with demand. Intel also said it would not pass along to partners and customers some of the increased costs the company was seeing in its supply chain.

All this has impacted the channel, at times making it difficult for solution providers to get the products they need to meet customer demand. In May server and storage system manufacturer Supermicro resorted to asking channel partners for extended forecasts on product orders to help the company navigate the semiconductor shortage.

The shortage also caught the attention of Washington D.C. decision makers. In June the U.S. Senate approved $52 billion in spending for domestic semiconductor manufacturing and research. That followed an executive order from U.S. President Joe Biden in February to review semiconductor industry supply chains and IT technologies.