Supply and Demand – Looking at the Chip Shortage

2021 has been a promising year in many ways, but this can’t be said for those involved in the high-tech gaming hardware market. Continuing on a pattern set in 2020, 2021 has seen a significant shortage in certain types of high-tech computer chips, meaning a lot of tech-reliant industries have had to miss out.

Applying mostly to cars, graphics cards, and new consoles, the 2021 shortage has been the result of various factors, sharing the same result of potential customer frustration.

A Matter of Supply

In terms of a shortage of supply, the 2021 chip issue is a result of the highly specialized components used in top-tier systems. As CNBC explains, there are only a few manufacturers in the world capable of building these chips, or the components for these chips, so quickly ramping up production isn’t realistically possible.

Instead, investing in more production facilities could take years, during which time the existing facilities are likely to be tapped at maximum production. Fortunately enough, supply should soon catch up with the demand in the automotive industry, but gamers aren’t going to be so lucky.

Chip Shortage Supply

Wafer detail” (CC BY-ND 2.0) by Tambako the Jaguar

Unusual Demand

In terms of gamers, the problems with demand stem from two primary avenues, scalpers and cryptocurrency miners. Scalpers are predominantly the reason why it’s still so difficult to find the new consoles, even as we approach a year after launch.

Using bots, scalpers have been able to get their hands on dozens or even hundreds of systems before regular users can, marking up the price for the resale market as Forbes notes.

While some major stores have now adopted policies to avoid this problem, many sell online and are not implementing adequate sales protection methods. For this reason, until enough supply hits regular shelves to plateau customer demand, scalpers are expected to continue this path until doing so is no longer profitable.

In graphics cards, scalpers are also an issue, though somewhat less so than with consoles. Instead, the problem with graphics cards tracks directly with the cryptocurrency market. Here, miners of currencies like Bitcoin and Ethereum use bots similar or identical to those adopted by scalpers to buy up supply as soon as it appears online.

Unusual Demand Chip Shortage
Bitcoin mining” (CC BY 2.0) by Marko

The idea followed here is that by mining cryptocurrency the value gained will eventually surpass the cost of the graphics cards, and the enormous amount of power they consume when mining crypto.

Again, as long as there is a financial incentive to continue down this path, we wouldn’t expect miners to change tack anytime soon. Plus, as card manufacturers have demonstrably no interest in stopping this process, this shortage could continue for some time.

Will You Be Affected?

This is a question of use-case. For automobiles, the answer will probably be no, not for much longer. For enthusiasts of interactive entertainment, that depends on what you want to play. For example, fans of online casino games like the King Kong Cash slot and Buzz Bingo can rest easy.

Titles like these only require low-powered hardware, so their websites and games can be accessed and browsed simply from most existing or older internet-capable devices.

On the other hand, if you’re looking for a new PS5 or 30 series GeForce card, chances are you’re not going to have a great time. Ultimately, getting around this issue could mean signing up in person with physical retailers, getting lucky, or even lowering yourself to pay scalpers (please don’t do this).

It’s not a great situation, and with reports that the shortage could last until 2023, we don’t have much recourse. Until then, try to settle in and get involved with anything you missed from the last-gen, and hope that something comes along.

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