Why is everything out of stock?

“Out of stock”. It’s a warning that’s become inescapable across e-commerce websites throughout the pandemic, and it’s about to become the new normal. How did this happen, and what does it mean for the audio visual technology that churches, broadcasters and event spaces rely upon? 

A microchip on a circuit boardMicrochips are everywhere – from your smartwatch to your seemingly dumb car, and even your electric toothbrush. Almost every aspect of modern life is run by microchips. They’re hidden in places you wouldn’t imagine – within your fridge, inside camera lenses, and hiding beneath the plastic shell of those wireless earbuds you got for Christmas. Global freight and airlines rely on their power to move you and your goods about safely. Your local grocery store relies on them to keep the shelves stocked. Literally every aspect of modern life is impacted by microchips in some way or form. 

But there’s a problem. There’s a crisis raging across the pacific. In Taiwan and South Korea, where 70% of the world’s semiconductors are manufactured, there’s a drought. Not just drought in the traditional sense of the word – where there is a lack of water – there is also a drought of human talent. These two factors have contributed to what is being called “the global semiconductor shortage”.

So how could something as essential as the microchip be allowed to become such a scarce commodity? 

A semiconductor wafer
Semiconductors are manufactured on ‘wafers’ which consist of layers of silicon stacked together.

Microchips are scarce not because the manufacturers are making fewer – in fact January 2021 turned out to be their biggest month on record with $40 billion in sales. That’s Billion, with a B and nine zeros. No, the answer lies on the opposite side of the supply and demand chain – the consumer. 

Remember how people have been working from home? They’re also spending record dollars to increase the ergonomics of their home office – buying bigger monitors and new webcams. And they’ve also been watching a lot of Netflix, leading them to buy bigger TV’s, better sound systems and new gaming consoles to boot. Not to mention they’ve been hoarding food, which of course has led many to purchase a bigger fridge or freezer. 

Many households have a surplus of cash (thank you federal government) and are buying second or third cars, leading to skyrocketing prices in the car market. Cryptocurrency miners are also adding to the problem, with record high prices on bitcoin attracting slews of miners to add to their crypto capacity.

Because online is the only way to reach their customers, businesses and churches have been buying up cameras and microphones by the boatload. Literally, boat loads of technology coming across the ocean from Taiwan and China to be sold to US businesses and consumers, with customs clearance delays caused by the tremendous volume of goods flowing in.

So why don’t they just make more microchips?

A semiconductor manufacturing facility
A semiconductor manufacturing facility

Easy solution, right? Give this man a medal, a Nobel prize for fixing the global chip crisis. The reality is that a single semiconductor takes up to 4 months to produce, and this must be done in a sterile environment. These manufacturing facilities take years to build, because what they’re making isn’t a slapdash Chipotle burrito – it’s a complex piece of precision technology, and there is no room for error. Manufacturers are already breaking ground on new factories, but these facilities won’t be operational for several years. Intel says the shortage will persist for “a couple of years”.

Remember that drought I mentioned earlier? Well, that’s also impacting the ability of chip manufacturers to scale operations. Creating microchips consumes tremendous amounts of water – up to 8 gallons of water are consumed in the manufacturing of a single microchip for a smartphone or tablet. Taiwan is currently importing water for its semiconductor industry – but it is still consuming more water than it is receiving. As recently as March it was predicted that water would run out within 3 months.

There’s one more element to the shortage – and it’s to do with politics (everyone’s favorite subject). Chinese vendors have been fearful of US sanctions on chips produced by US allies and companies, so these Chinese vendors have been hoarding chips.  The theory is they’re fearful that the US government will restrict China’s access to microchips, and this would be catastrophic for the Chinese export based economy which is dominated by electronics. China has also been poaching the top semiconductor human talent from Taiwan, exacerbating the crisis.

All of this means one thing – longer wait times for you. How much longer? Well, how long’s a piece of string?

Which items have been impacted the worst?

Unfortunately the impacts are most felt on the budget items – we say thats unfortunate because often these are the only products that many churches and small facilities can afford. We’ve seen extended lead times Blackmagic cameras, along with low end audio consoles like the x32. Microphones, converters and even lenses have been affected. The more expensive items like Ross switchers and DiGiCo consoles seem to be more readily available, at least for now. 

Okay, I get it, there’s a shortage. I’m going to have to be patient when I order electronics. Any other advice?

A semiconductor on a fingertip
Modern audio visual devices can contain thousands of small semiconductors.

Sure. The biggest piece of advice we’re giving right now is to plan ahead. Not just a few weeks or months … but plan 6 to 9 months ahead. If you’re a church with a new campus launching in the first quarter of 2022, now is the time to be placing your orders. And unfortunately this often means paying for your goods up front, and then not seeing them arrive for months. 

We’ve noticed some items popping up on Ebay and Amazon at prices well above normal – like this second hand Allen & Heath console which is selling above the MSRP.  So if you’re in a pinch, you’ll likely be able to find a solution, but don’t expect to get a good deal. The old adage “to fail to plan is to plan to  fail” has never been more appropriate for AV projects.

The best thing you can do is talk with your integrator and come up with a technology plan that you can scale into as items become available over the next two years.

 

Our team provides turn-key audio visual solutions for churches, businesses and universities. Our design philosophy focuses on creating systems that are reliable and easy to use.

Schedule a quick call with us to learn more.