The Microchip Shortage Is Not Going Away Soon, And It’s Affecting Way More Than Cars

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The microchip shortage is not going away soon, and it’s affecting way more than cars

COLUMBUS, Ohio — Matthew McClellan has one piece of advice for anyone planning to buy a video game console for the holidays.

“Buy now,” he said from inside his store Forever Games. Once the holidays arrive, “you’re going to see nothing on store shelves,” he said.

A shortage of microchips and semiconductors is to blame, caused by the same supply chain issues that have hampered industries across the economy and impeded a fragile economic recovery. Much of the reporting on the shortage focuses on car companies and computer makers, but the problem is trickling down to some of the smallest businesses too such as furniture and home goods.

Microchips are so ubiquitous, most would be surprised by the amount of household items sold at mom-and-pop stores that contain them. “Printers and phones have the same problem, they all require chips,” said Jeff Taubman, who owns Downtown Computers in Downtown Columbus, which sells electronic devices and provides technical support to businesses.

Factories that produce these key components were forced to close or work at limited capacity for months at the onset of COVID, and “increased demand for consumer electronics and automotive products caused a ripple effect throughout the entire supply chain,” said Paul Hong, a distinguished professor of supply chain management at the University of Toledo.

Adding to the stress on the supply chain, manufacturers don’t want to build new factories or increase production at existing ones, worrying that they’ll incur debt and unsold product once the supply chain returns to normal. That means consumers and entrepreneurs shouldn’t expect the problem to go away. “You’re most likely going to see continued out-of-stocks through at least the end of quarter two of 2022,” said Michael Levin, a professor of marketing at Otterbein.