The chip shortage that plagues the world has no obvious signs of ending, which means it’s time to develop a strategy, especially if you are an OEM.

You have to work very hard to be unaware that the continuing chip shortage has led to unassembled vehicles, unshipped computers, consumer concerns, and OEM panic. 

Due to the supply chain disruption associated with COVID-19, chip manufacturers around the world are struggling to find the raw materials needed to manufacture their products. Although the industry is trying to transform, it is far from an instant process, and as semiconductor manufacturers try to find a foothold, even the recommendations made a few months ago may soon become obsolete.

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When the chip shortage ended, I heard several different opinions. The latest date I heard is mid-2023, but Gaurav Gupta, vice president of semiconductors and electronics at Gartner, said that by mid-2022, certain industries will return to normal. However, Gupta cautiously expressed this prediction, saying that we may see a balance between supply and demand in mid-2022, but it will not fully return to normal.

"Now some equipment has a very long lead time, 52 weeks or more. Then some equipment has a lead time of 28 weeks, or 32 weeks. We expect the delivery time to return to normal levels by mid-2022. "Gupta said. 

Many companies, especially original equipment manufacturers (OEMs) with declining supplies, may not want to wait 6 months to return to normal delivery time (equivalent to an extra wait). However, there may be ways to avoid suffering for most of the other year.

If your company is nearing the end of the hardware replacement cycle during the chip shortage, sorry: you may not be able to obtain new hardware until the situation stabilizes. Rather than worrying about gaining a new corporate laptop load, Gupta says it’s time to do what the rest of the world did during the pandemic and move to the cloud. 

Gupta said that Gartner has seen a general trend of companies deploying laptops or desktops for employees who use cloud services in the past year to reduce reliance on internal hardware. Gupta said: "This will not be a temporary solution. We see this trend is coming, and the pandemic has accelerated this trend." 

If you have been procrastinating because of the uncertainty of cloud services, Gupta said that the past year has proven that it is a mature technology, ready for the big era. "People used to worry about latency or data security. Now, with all major hyperscale enterprises investing in cloud data centers, etc., I think these concerns have been eased to a large extent," Gupta said. 

Some companies believe that it is unrealistic to use cloud technology to replace hardware upgrades. For these companies, Gupta recommends abandoning custom hardware orders and choosing products that are in stock and ready to ship. This can turn a waiting period of several months into a one-week waiting period.

End users and consumers are definitely affected by the shortage of chips, but the greater impact is on original equipment manufacturers who rely on chips to make the products they sell. Solving the problem of chip shortages can take different forms, depending on the company's needs and the types of chips they ship.

For example, automobile companies have a problem because the types of chips they ship are existing, and the verified trusted components are not the most advanced. Gupta said: "From a semiconductor point of view, there is more shortage in the legacy of mature devices." This means that automakers and other companies that use older types of chips are actually affected by silicon issues.

Other types of original equipment manufacturers using cutting-edge silicon to manufacture products, such as GPUs and CPUs, have not faced such a severe shortage because the demand for these new types of chips is much smaller. Gupta said that the shortage of new chips is actually caused by the shortage of the ABF substrate on which these chips are located. 

What advice does he have for companies that rely on older chips? Start ordering newer types of chips.

"You have to understand that the root of today's shortage lies in traditional and mature technical equipment. Migrating your products to newer, more advanced equipment obviously makes sense," Gupta said. In addition to being easier to obtain, a newer chip design now means your chip design will last longer, thereby saving future costs. 

Small companies that lack lobbying power do not have much influence on semiconductor manufacturers, and Gupta says this makes them more restrictive: Although technology leaders can persuade the government to ensure that they get chip allocations, other companies are left behind. Gupta said: "Work together to form a consortium and get government support to put pressure on chip foundries," and cited similar successful measures taken by the auto industry earlier during the pandemic. 

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Finally, Gupta suggested that companies bite the bullet and place large long-term orders with chip foundries. "Semiconductor foundries have begun to prioritize non-cancellable long-term orders to eliminate double and triple orders," Gupta said. Gupta said this was the main reason for the initial shortages and supply disruptions during the pandemic, as companies began to issue panic orders, which led to demand inflation. Gupta said that the removal of false orders will be an important part of the recovery of the chip manufacturer industry. 

"Chip manufacturing is a capital-intensive industry. They will not just expand production capacity based on today's demand, but if OEMs sign long-term contracts, they will be more confident, which means orders will be faster," Gupta said. 

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Brandon is a full-time writer for TechRepublic. He is an award-winning monograph writer who has served as an IT professional and served as a member of the U.S. Army.

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