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War and Recession Could Drag Out Global Chip Shortage

TSMC
(Image credit: TSMC)

The global chip shortage may continue to drag on as the war between Russia and Ukraine continues, and as consumers slow their spending, according to one analyst (speaking to CNBC in a recent report). The war, combined with recessions in consumer spending, could increase the cost of tech products — such as phones, computers, and other devices.

When it comes to the war, it's more of a supply chain issue: Both Ukraine and Russia are home to raw materials, gases, and resources needed to build semiconductor chips. Exporting these critical resources will remain difficult as the war continues. Ukraine and Russia are the largest exporters of krypton gas, which is an important resource used in semiconductor chip production

Neon, another gas, is just as critical — and over half of the world's neon supply is produced by companies in Ukraine. These two critical gasses could become very difficult to come by for all semiconductor fabs around the world. 

If krypton and neon shortages get critical, it will affect prices and supply of all devices that use semiconductors — phones, tablets, computers, vehicle ECMs, and anything else that has a computer chip. 

Another problem is the growing rise of inflation — and the reduction of consumer spending on computer products in particular. The enterprise sector appears to be immune to this problem for now, but the consumer space is already showing signs of recession. 

On top of this, Bloomberg reports that tech companies in Asia have started to slow down on spending and hiring as margin pressures increase due to higher salary costs and skill gaps in the market. Apple already plans on slowing down hiring just for these reasons alone.

These three factors combined could mean significantly increased prices on computer products in the upcoming months. But this will depend on how bad the inflation problem becomes, and if the war in Ukraine continues long enough to put an even more intense strain on the supply of critical gases. 

We aren't saying you should go out and buy a GPU right this second, while prices are shockingly low. But it might not be a bad idea, just in case prices do skyrocket later this year.

Aaron Klotz
Freelance News Writer

Aaron Klotz is a freelance writer for Tom’s Hardware US, covering news topics related to computer hardware such as CPUs, and graphics cards.

  • BX4096
    Just peachy. Only a vicious megalomaniac like Putin could take a look at the COVID-devastated world and... decide to make it even worse for everyone, including his own brainwashed citizenry. To paraphrase Winston Churchill: you can always count on Russia to do the wrong thing . . . period.
    Reply
  • Kridian
    "But it might not be a bad idea, just in case prices do skyrocket later this year. "When they skyrocket again later this year, we just wait again. :geek:
    rinse & repeat
    Reply
  • watzupken
    Its funny that lower consumer demand in this case is expected to increase prices. While high demand, we see the same increase in price. In short, it doesn't matter whether its demand or supply. It is up to them to determine prices.
    In my opinion, if demand is low and they forcefully increase prices, the manufacturer will be on the losing end since technology moves on very quickly. If you have an overstock of components that will be obsolete in a year or 2, they will eventually have to write it off or clear them off cheaply.
    Reply