IoT Analytics: Markets Hit by Global Chip Shortage

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IoT Analytics: Markets Hit by Global Chip Shortage

In 2020, COVID-19 impacted both the demand and supply of chips, a new report by IoT Analytics says. Supply was reduced, as production was halted at times, and supply chains and access to raw materials were not intact. In the first half of 2020, chip demand fell as uncertainty set in and budgets were frozen. In the second half of 2020, demand came back, but supply was often disrupted. This resulted in a supply shortage that first impacted the automotive industry and then extended to other segments, such as smartphones, TVs, gaming, and IoT.

The lower demand in 2020 coupled with a shortage of supply at the end of the year led to a gap of 33 million cellular IoT chipsets that would have been shipped had everything gone smoothly.
In 2021, the chip shortage continues. Out of 3,000+ analyzed public companies, 11% mentioned “chip shortage” in their conference call in the second quarter (Q2) of 2021. IoT Analytics expects that there will be an additional shortage of 20 million cellular IoT chipsets due to limited production capacity and ongoing COVID-19 restrictions in some regions, which have resulted in severe supply chain issues, such as a lack of vessels and shipping containers and port congestion.

IoT Analytics - Markets Hit by Global Chip Shortage

The market is expected to grow 9% YoY in 2021 but would have grown a lot more had there been no supply constraints. According to market leaders TSMC and Qualcomm, the situation is likely to improve in early 2022. Clients are preparing for a higher level of inventory to ensure supply stability due to uncertainties from geopolitics and the pandemic. As a result, our capacity will remain tight throughout the year 2021,” said C. C Wei, Chief Executive Officer at TSMC.
Every connected IoT device that makes use of a cellular connection (e.g., 2G, 3G, 4G, 5G, LTE-M, and NB-IoT) uses a cellular IoT chipset. The chipset can be embedded directly into the device’s printed circuit board or into an IoT module that is placed in the device. The research presented in this article focuses on the larger of the two segments: cellular IoT chipsets embedded within an IoT module.

Author: Tim Cole
Image Credit: Pixabay

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