Supply shortages in China:
what's actually going on there?

For months, microchips and panels have been a scarce commodity at a high price. Not only LCD manufacturers, but also companies all over the world are desperately waiting for incoming goods - and are confronted with bad news  every day: Price increases, new delivery delays or even complete production stops. How did it get this far? And how do we get out of it?

Reason 1: Covid-19 measures

After the outbreak of the pandemic at the beginning of 2020, LCD manufacturers had to close all production facilities for the time being. Production had reached a low point - order backlogs were creeping in. 

Although the production lines were able to return to their old form relatively quickly, the backlogs were enormous. In addition, the shortage of certain raw materials such as microchips and panels were steadily increasing. Today, LCD manufacturers not only face capacity problems, but also a growing shortage of raw materials.

Reason 2: Demand for work-from-home devices

Around the world, workplaces, lectures and courses shifted to the home. New devices, including laptops and monitors, were ordered en masse. The demand for electronic devices (which only work with a chip!) increased enormously within a very short time.

Reason 3: The nature of microchips

The production of microchips involves countless steps and is therefore rather complex. Unfortunately, chips are not that easy to produce from scratch. Whereas delivery times at the beginning of the year were around 16 working weeks, producers worldwide are struggling with delivery times of up to 16 months and more. Believe it or not.

Reason 4: Reduced air traffic

Logistics companies also faced major challenges as a result of the Covid-19 pandemic. Strict hygiene measures at airports but also reduced air traffic led to longer delivery times and rising air freight prices.

Reason 5: Economic boom

In addition, the economy has largely recovered since the outbreak of the pandemic and is on the upswing. Many factories are operating at maximum capacity.

So yes: the Covid-19 pandemic is a decisive factor. And what will happen next?

It is almost impossible to make predictions about developments. Even if individual sources claim to be able to determine the end exactly - at the moment, forward-looking purchasing and creative solutions are the measure of all things.

Would you like to discuss a project with us regarding supply shortages? Then please contact us by e-mail at sales@displaylc.com or by calling +41 56 201 00 10.

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