Global chip crunch now hits the small screen; TV prices on the rise

Toyota rides out semiconductor chip shortage, doubles profits in Jan-March

According to market research company NPD, the price of smart TV models has shot up around 30 percent in recent months, compared to the corresponding time last year.

With most of the world locked up indoors due to the COVID-19 pandemic, so much dependence on technology has never been witnessed ever before in human history.

Be it televisions, laptops or smartphones, human beings have never been so dependent on them for work from home to online classes or for socialising to binge-watching to alleviate the lockdown blues. But all this extra screen time has set in motion a semiconductor supply crunch, causing prices of some of the gadgets like TVs to rise.

Several other gadgets like laptops, tablets, and VR headsets also use the same circuitry, raising fears that they may also experience a similar shock.

Also read: Nintendo forecasts decline in Switch sales, warns of chip uncertainty

Some manufacturers, like Taiwanese firm Asus, have already flagged the potential price rise. Asus said during a quarterly earnings call in March that a shortage of components would mean “price hikes further upstream,” which would likely affect consumers, reported Wired.

Sony said this week that the PlayStation 5 would remain in short supply through 2022 due to the crunch. In February, Sony CFO Hiroki Totoki had said it was difficult for them to increase the production of the PS5 amid the shortage of semiconductors and other components.

The impact is not limited to gadgets. In January, passenger vehicle sales witnessed a YoY decline of over 4 percent due to the semiconductor shortage, as per automobile dealers’ body Federation of Automobile Dealers Associations (FADA).

Vinkesh Gulati, FADA president, believed the industry misjudged demand post-lockdown. Moreover, chipmakers moving to electronics and server industries has led to slow production, he added.

Also read: Samsung sees chip profits up, mobile sales down in second quarter on chip shortage

Automakers from General Motors to Stellantis and Honda Motors have had to shut down assembly lines due to the shortages, while some firms furloughed staff.

Last month, Jaguar Land Rover temporarily suspended production at two of its main facilities in the United Kingdom due to the shortage of computer chips.

In fact, many of the world's biggest automakers are temporarily shutting down operations in Asia, Europe, and North America due to the continuous chip shortage.

Among other carmakers, Ford, Toyota, and Volkswagen are also hit by the problem. The chips are fitted in cars to manage and monitor everything from engine and driving performance to air-conditioning and entertainment systems.

The ongoing COVID-19 pandemic sparked a boom in demand for home electronics and the economic slowdown also caused certain industries to misjudge how demand would fall.

Also read: Apple soars past sales, profit targets with strong iPhone demand, warns of chip shortages

Besides, there are broader supply chain disruptions like a fire in March at a plant in Japan, which was manufacturing a range of semiconductor components, including display integrated circuits.

Semiconductor chips are made of silicon. These chips control memory functions in products ranging from automobiles, computers, gaming consoles, and other electronic items.

According to a Reuters report, Asian chipmakers are rushing to expand their production capacities to meet the global demand. However, many have warned that it would take months to plug the supply gap. On the other hand, some chipmakers are battling issues like under-investment.