Why is there a 2021 chip shortage?

Question

Zippia Team · Accepted Answer

There is a chip shortage in 2021 because of the COVID-19 pandemic. Many factories had to close for public health and safety, and chip manufacturing involves a complex supply chain spanning the globe. The same chip may even cross the same national border multiple times in the production process.

In short, the pandemic slowed down the manufacturing process significantly, leading to a decreased supply of chips the world over.

At the same time, quarantine policies increased consumer demand for electronics. This combination of decreased supply and increased demand naturally led to a shortage of the product, as well as increased prices for many electronic products.