The ongoing global chip shortage has roiled the automotive and consumer technology industries for months. But the ripple effects of the crisis, which could last into 2022, stretch far beyond automakers idling plants and consumers waiting longer for the latest gaming consoles.
According to an analysis by Goldman Sachs (GS), the semiconductor shortage touches a mind-blowing 169 industries in some way. We’re talking everything from steel product and ready-mix concrete manufacturing to industries that build air conditioning systems and refrigerators to breweries. Even soap manufacturing is impacted by the chip crisis.
The graphic below breaks down the various industries that are dealing with the shortage.
To determine which industries were hit by the shortage, Goldman Sachs looked at each industry’s’ need for microchips and related components as a share of their GDP. Industries that spend more than 1% of their GDP on chips, the firm says, will be impacted by the semiconductor shortfall.
For reference, in the automotive sector, 4.7% of industry GDP is spent on microchips and related semiconductors, on this basis, according to Goldman.
The automotive industry has been particularly burned by the chip shortage due to the way its supply chain works. Automakers tend to run incredibly lean on supplies for vehicles to keep costs down. But the coronavirus pandemic upended that entire system.
When the pandemic began, automakers, figuring consumers would slow down auto purchases, cut down on their supplies of semiconductors used in everything from their vehicles’ infotainment systems to high-end driver-assistance technologies.
But consumer interest in vehicle purchases rebounded faster than the automakers had predicted. And by Q4 of 2020, they were outpacing Q4 2019 sales numbers. At the same time factories remained idling due to coronavirus restrictions, putting automakers even further behind.
While that was happening, people around the world began buying up consumer technology goods to adjust to the pandemic induced work-from-home and remote learning environments. With automakers not purchasing chips, semiconductor makers started working on chips for consumer tech products.
Once the automakers realized they needed more chips than they thought, the chipmakers were already dedicating time to making chips for consumer tech companies. Now both industries are struggling for support from the limited number of global semiconductor manufacturers that can meet their needs.
Chips aren’t exactly easy to make, either, with advanced semiconductors taking up to 6 months to produce. According to Goldman Sachs’ Spencer Hill, the semiconductor shortfall could wallop U.S. GDP by as much as 1%, despite the uptick in consumer spending as lockdown orders continue to ease.
“Some computer chips have no available substitute, and if output of every product that uses chips were to decline proportionately, the drag on 2021 GDP would be around 1%,” Hill wrote in a research note.
While that prediction may sound dire, Hill says the true impact on GDP will likely be milder, with GDP taking a 0.5%, as companies that are able to use different available chips make adjustments to their needs.
The chip crisis is still far from over, however, and as industry leaders and politicians work to ease the strain on manufacturers across the country, consumer goods will still cost more as a result, with Goldman predicting a 1% to 3% jumping in prices.
In other words, if you’re in need of a car or some kind of laptop or other piece of consumer tech, now is the time to buy — if you can find them.
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