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Why you could soon pay more for a new TV, phone

FINANCIAL STANDARD
By Peter Theuri | May 10th 2021

Demand for electronics is likely to continue outstripping supply, and the margin might grow even wider in the near future as a shortage of semiconductor chips continues to plague the world.

The shortage of silicon chips, which drive a lot of electronic gadgets, will mean increased prices of electronic gadgets that use them, including cars, computers and smartphones.

For people already battered economically by Covid-19, with millions globally losing jobs or seeing their earnings shrink considerably, it is likely that they may no longer afford electronics.

According to Reuters, the shortage of semiconductor chips has led to delayed car deliveries and a supply shortfall in home appliances and costlier smartphones.

Governments and tech companies are now burning the midnight oil trying to find a solution.

Kenya’s recent foray into the market with the launch of a semiconductor factory at the Dedan Kimathi University of Technology (Dekut) is thus seen as a timely intervention. Experts say if Kenya can become self-sufficient in the future, the global shortage would hurt the country less.

They say part of the shortage of semiconductor chips was caused by an unforeseen hike in purchases of computers and mobile phones as more people were forced to work from home by the pandemic.

“At the same time, users turned to new, chip-filled forms of entertainment to pass the time during months of lockdown, ranging from gaming to cryptocurrency mining,” noted tech website ZDnet. “They also bought more cars than industry officials expected last spring, further straining supplies,” noted the Reuters news agency. 

A global trade war between the US and China, which reached an ugly climax during the Donald Trump administration, has also exacerbated the shortage.

Sanctions to Chinese tech companies have impacted their ability to produce at their previous rate. Most of them have been reliant on semiconductor chips manufactured in the United States, which is the most dominant silicon chips producer in the world.

“For decades, the US has been a leader in the semiconductor industry, controlling 48 per cent (or $193 billion) of the market share in terms of revenue as of 2020. According to IC Insights, eight of the 15 largest semiconductor firms in the world are in the US, with Intel ranking first in terms of sales,” said media outlet FP.

Semiconductors are small elements but are essentially the brains behind the running of smartphones, PCs, pacemakers, the Internet, electric vehicles, aircraft, hypersonic weaponry and other electronic gadgets.

In an increasingly evolving world of artificial intelligence, robotics and the internet of things, these tiny “brains” are essential in the development of next-level technological devices that can usher mankind into the next digital realm.

But it now seems some of these dreams might be shelved and those who can afford these gadgets having to pay more for them.

A semiconductor chip. [Courtesy]

Closure of foundries, the semiconductor fabrication companies, in the wake of Covid-19 last year also did not help matters. Some of the largest semiconductor manufacturers in the world, including Intel Corp, Samsung, Taiwan Semiconductor Manufacturing Company, SK Hynix, Micron Technology Inc, Qualcomm, Broadcom Inc and Nvidia slowed down production due to the disruptions occasioned by the pandemic. The nanotechnology and semiconductor manufacturing facility by Semiconductor Technologies Ltd (STL) at the Dedan Kimathi University of Technology on a public-private partnership arrangement hopes to cash in on the prevailing shortage.

It also gives Kenya a head start over her regional neighbours in technology, potentially making it the sole supplier of the crucial components.  

“This is the dream some of us have for this country, our ability to become an industrialised nation, to be able to create good-quality and well-paying jobs for our young people,” said President Uhuru Kenyatta after the opening of the factory.

“This is going to be the future for us to make our own motherboards and eventually TVs and phones...” 

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