The big picture: The ongoing shortage of components has caused a lot of headaches for several industries, affecting the production of everything from smartwatches and toasters to washing machines, phones, tablets, laptops, home routers, and cars. Now it’s the turn of TVs, which are seeing an increase in sticker prices while manufacturers struggle to acquire the necessary components to satisfy demand.
In March we learned the global chip shortage had such an impact on supply chains that we wouldn’t see a full recovery until 2023, while some optimists in the industry expect this crisis to ameliorate in 2022. The Biden administration stepped in to try and address this, and tech giants have created a coalition to help secure the necessary funding for domestic chip factories and research centers.
Last month, an extreme shortage of $1 display driver chips signaled an impending wave of price hikes for everything equipped with an OLED or LCD screen. That means everything from smartwatches and phones to tablets, laptops, monitors, smart appliances, TVs, and car infotainment systems cost more to manufacture, and manufacturers will only be willing to sacrifice so much from their profit margins before those costs are going to be passed to the customer.
Samsung recently warned the shortage of components would impact production of TVs, and the effects can already be seen in rising sticker prices for them. For instance, larger TV models are now, on average, 30 percent more expensive than they were last summer.
The increase is mainly caused by shortages, but display manufacturers have also seen a rise in large-area flat panel display cost. According to research firm OMDIA, prices for TFT panels had already seen a 50 percent increase in 2020, and the current display driver chip drought will last until at least the end of 2021. Other materials are also in short supply, which is why manufacturers are seeing an unprecedented increase in price for the glass substrate used to produce display panels.
Elsewhere, foundries like TSMC have been making use of their full capacity to fulfill a growing backlog of chip orders, with each one of the top five maintaining over 1.5 million wafer starts per month. Despite these efforts, a combination of factors have led to multiple industries being choked, and it’s not just graphics cards and consoles.
Apple has had to postpone iPad and MacBook production, Micron has warned that DRAM prices are set to increase as supply shrinks, and laptop manufacturers have had to burn through their stocks as they aren’t able to make new ones fast enough to cover demand. Even routers are affected, with a 60-week delay between new orders and their expected fulfillment date.
Automakers have seen their part, too, as they failed to predict and prepare for the sudden spike in demand from people looking to avoid crowded public transport. This has opened up a new opportunity for the Pat Gelsinger-led Intel, who wants to start manufacturing chips for vehicles by the end of this year.