The Global Chip Shortage and effect on LED Display industry

As we know, a lot of semi-conductors are used on LED displays like LED lamps, driving ICs, etc. From late 2020 to present time, a global chip shortage is seriously influencing LED display industries. As from feedback of LED manufacturers, some chips delivery time even goes up to 52 weeks.

What caused it, how long will it last?

Poor planning is one cause of global chip shortage

One problem is poor planning.

Year 2020 was a catalyst that brought digital business innovation to the forefront of organizations. Digital business acceleration is execution at speed. User requirements were increasing quickly since last year.

On the other hand, Investment of chip manufacturing did not keep up with the requirements.

Trade sanctions and phone rollouts added to global chip shortage

Analysts expected that the worldwide semiconductor shortage will last until Q2, 2022.

Add to this rollout of the 5G smartphone and the trade sanctions the U.S. placed on China. That meant many smartphone manufacturers in China like Huawei, couldn't buy chips after a certain time. As the result, they placed big orders to avoid no chip to use in the future.

Other smartphone makers like Apple, Samsung…followed to place large chip orders as well. It made the foundries very busy and result in sudden increase in demand.

The pandemic in the global chip shortage

The pandemic played a big role in this global chip shortage. It changed the lifestyle of people. A lot of people go to internet to by most of things they need. This increased the demands of digital equipment like computers and related products.

Demand for cloud computing services from providers like AWS, Microsoft Azure and Alibaba continues to skyrocket. They buy lots of semiconductors.

Mobile phone sales remain hot. Crypt currency continuous hot added the demand to GPU and other chips.

All those events make the semiconductor demand hotter than ever.

However, a few isolated events, including in Japan an earthquake and semiconductor fabrication plant fire, a winter storm in Texas USA, which shut down some fabricators for a long time this year.

Is there any solution for LED display industry?

There is no short-term solution. If supply is constrained you can't increase it in a short timeframe …. We're looking at the second quarter of next year" before lead times improve. In the meantime, prices will go up.

For LED display manufactures, they tend to purchase stocks of key parts as much as they can pay. That will help them shorten lead time, lower the material cost, therefor win the trust from customers.

For LED distributors and end users, the best solution is to confirm orders as fast as possible. The earlier to close the orders, the lower cost they will pay.