The Global Chip Shortage
The past year and a half have been unexpected in more ways than one, and the shortage of computerized chips has been one of the most impactful events on the market. One of the main reasons for the shortage has to do with the COVID-19 pandemic that has forced some semiconductor manufacturers to stop production for the time being as well as the increased need for technology to stay connected.
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Not only did the pandemic affect production, with remote connection on the rise, the demand for new devices to stay remote while still being in contact with loved ones, attending school from home, or working out of the office increased greatly. Devices are powered by semiconductors and this demand along with slowed production has contributed to the depleted supply of chips and has specifically damaged the automobile industry. Some outlying causes for the minimal supply of chips include the winter storm in Texas and an earthquake in Japan forcing the shut down of semiconductor plants.
These seemingly unattainable chips are small silicon transistors that are used in every smart device, appliance, and automobile. When automakers and dealerships shut down because of the pandemic, they didn’t foresee that once they reopened, the demand would be so overwhelming that production would not be able to meet it. Additionally, GPUs or graphics processing units that are used in cryptocurrency mining, gaming, video editing, machine learning, and more have been inflated significantly due to scalpers retrieving these highly demanded units and selling them on their own.
Nvidia’s Prices and the Chip Shortage
One specific result of the global chip shortage has to do with the leading semiconductor and chip company that has been most heavily affected by the ongoing depletion of supply: Nvidia. The company has seen record-high prices, an increase of about 25%, on GPUs that were already constantly out of stock thanks to scalpers and crypto miners using bots to buy out all the supply. It’s worth mentioning that the Trump administration’s 25% tax on graphic cards imported from China has also played a part in provoking the volatile shifts in the market.
Additionally, because scalping has become such a major issue within the chip and tech industry, Nvidia’s highly sought-after products are being bought by the masses and sold at a higher price more than ever seen before. In response to the scalping, Nvidia has hiked up the normal price of the RTX 3080 Ti from $999 to $1,199. In the midst of the chip crisis, meeting scalpers’ prices is a way Nvidia is combatting the unfair reselling of their chips.
Nvidia’s stock price remains at a peak of $748.43 and seems to be steadily growing. This is directly correlated with the chip shortage that is said to persist throughout the rest of 2021 with a chance of recovery towards the end of the year and beginning of 2022.