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The Chip Shortage Hurts Auto Sales a Lot, Consumer Electronics Only a Little

Consumer electronics production is very high—it's just that demand is even higher

3 min read
Santa holding a net chasing after a butterfly made out of a game system and controllers.
Adam Howling

Hot consumer tech is hard to snag this holiday season. Get used to it.

New-car shoppers in the United States, China, and everywhere else face slim inventory and dealers unwilling to budge on price. It's all because of the global chip shortage, which has prompted the Biden administration to support legislation that includes US $52 billion in federal subsidies for U.S. semiconductor manufacturing.

But the problem extends far beyond new cars. A report by The Information found that 70 percent of wireless retail stores in the United States faced smartphone shortages. Graphics card pricing remains well above the manufacturer's suggested retail level and shows no sign of retreat. Game consoles are drawing hundreds-long lines a full year after launch. Televisions are both more expensive and more difficult to find than last year.

You might think this a temporary, COVID-related supply-chain shortfall, but no. The problem is not the number of PlayStation 5 consoles in stock. The problem is the people in line ahead of you.

Sony's PlayStation 5 sales data illustrates the nature of the challenge. Global sales of the PlayStation 5 outpace those of the PlayStation 4 at this point in the product's life cycle: The PS5 has sold more quickly than any other console in Sony's history. The same pattern holds for PCs, smartphones, video games, and tablets, which all saw an uptick in year-over-year sales during the first quarter of 2021. That's quite an achievement, given the unprecedented, lockdown-driven highs of 2020.

The serious chip shortage really is hobbling the production of automobiles, the largest and most expensive of all our consumer gadgets. But it's a mistake to assume that this shortage limits supplies of lesser gadgets, most of which are in fact pouring into stores and then flying off the shelves.

The automotive industry's problems really are the result of a serious chip shortage. But that's the exception: Most consumer tech is pouring into stores, then flying off the shelves.

You should expect unrelenting prices and very long lead times that only lengthen. If you want truly in-demand gear to unwrap for the holidays, whether it's a game console or the new iPad Mini, it may already be too late to get it (from a retailer, at least—there's always eBay). And you should plan to plan ahead for the next year, as there's no sign that supply will catch up in 2022.

This may annoy shoppers, but the disruption among consumer tech companies is even more dire. Record demand is typically a good thing, but the sudden surge has forced a competition for chip production that only the largest companies can win. Rumors hint that Apple has locked in most, if not all, leading-edge chip production from Taiwan Semiconductor Manufacturing Co., the world's largest independent semiconductor foundry. Apple's order is said to include up to 100 million chips for new iPhones, iPads, and MacBooks. Even large companies like Qualcomm are struggling to compete with Apple's size and volume.

Big moves from big companies have the trickle-down effect of delaying innovative ideas from smaller players: a crank-powered game console, a customizable LED face mask, and a tiny, 200-watt USB charger are just three out of hundreds of examples. The result could be a subtle, unfortunate squeeze on tiny tech startups that can spoil the most conservative production timeline. Backers are likely to face ever-increasing waits. Some will give up and demand a refund.

So, should you learn to live with stock notifications and long lines indefinitely? Maybe not. Investment in production might well catch up with demand by 2023. Industry analysts worry this could lead to a price crash if semiconductor manufacturers overshoot. Perhaps the summer of 2023 will be the year you can once again buy the latest consumer tech not just minutes but hours after it's released. Until then, well, you'll just have to be patient.

This article appears in the December 2021 print issue as "When the Chips Are Down."

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How Duolingo’s AI Learns What You Need to Learn

The AI that powers the language-learning app today could disrupt education tomorrow

9 min read
This playful illustration shows Duolingo’s owl mascot, cut away down the midline, showing hidden inside a high-tech skeleton suggestive of some sort of AI robot.
Eddie Guy

It’s lunchtime when your phone pings you with a green owl who cheerily reminds you to “Keep Duo Happy!” It’s a nudge from Duolingo, the popular language-learning app, whose algorithms know you’re most likely to do your 5 minutes of Spanish practice at this time of day. The app chooses its notification words based on what has worked for you in the past and the specifics of your recent achievements, adding a dash of attention-catching novelty. When you open the app, the lesson that’s queued up is calibrated for your skill level, and it includes a review of some words and concepts you flubbed during your last session.

Duolingo, with its gamelike approach and cast of bright cartoon characters, presents a simple user interface to guide learners through a curriculum that leads to language proficiency, or even fluency. But behind the scenes, sophisticated artificial-intelligence (AI) systems are at work. One system in particular, called Birdbrain, is continuously improving the learner’s experience with algorithms based on decades of research in educational psychology, combined with recent advances in machine learning. But from the learner’s perspective, it simply feels as though the green owl is getting better and better at personalizing lessons.

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