The holiday season is approaching which means wish-lists are being created and sent out by the millions. Some of the most common items on these lists include smartphones, gaming consoles, tablets, and laptops, all tech gadgets that are mostly being produced in other countries and then shipped to the US. There’s a problem however: there have been significant delays in shipments and holiday shopping windows are getting smaller and smaller. There has been an estimated 30% slowdown this year for holiday present shipping and 50% of people are finding that the products they want are out of stock. What is causing these global supply chain disruptions and tech shortages?
The Chip Shortage
To start, the sheer amount of products that are being shipped to the US has been contributing to the delay. Only 12% of global chip manufacturing is done in the US, all other chips are manufactured across seas. All tech items require these chips in order to function, and the high demand is causing back up in production and shipping. The price to produce chips is increasing as well due to the shortage in production. It is estimated that the cost of a tech chip will be raised up to 30% by next year, and the number will only grow as they become higher in demand.
When chips are able to be produced and fit into new phones or laptops, there are now problems in actually shipping the product to the US. There has been an 83% increase in the time it takes for freight deliveries from China to the US, and the prices for all means of travel are increasing as well. Shipping container costs have risen by 14x in the past two years, and air cargo has increased by 40%. This means that prices for products are also increasing in order to try and balance the increased cost of production and shipping. Popular tech companies are beginning to raise their prices, sometimes increasing up to $50.
So how do we solve this problem? For starters, chip production in the US needs to increase. There is a lack of resources in the US which is why outsourcing is necessary, but with the intense demand it is causing extreme supply chain disruptions. Increasing tech production is a difficult task to take on, and so there are smaller solutions that can be done on an individual level.
Repairing Old Tech
Something as simple as repairing old phones rather than replacing them can help with the high demand of new devices. Many people have a device in their home that can be repaired for a fraction of the price of a new device, and not only saves them money, but is more ecologically friendly as well. The US alone generates 6.9 million tons of electronic waste every year from different devices being thrown away when they are thought to be dead. What many people don’t know is that most problems in tech devices can be repaired for a small cost and can even extend that device’s lifespan for a few more years making the need for a new phone or laptop less than what we’ve been seeing recently.
Solving the US production problem is a heavy feat, and it will not happen overnight, but there are still steps that can be taken in order to lessen the strain on supply chains that are affecting the country in many ways. Even simple things like getting devices repaired can go a long way, and hopefully if these small changes are made on a large enough scale, changes will be seen very soon. Learn more about how to overcome the holiday season tech shortages below: