In 2020, the average UK home had an average of 10.3 internet-connected devices, a number that has increased by 26% over the last three years. 

IoT devices surged in popularity during the pandemic, prompted by the shift to remote working, which saw purchases of smart devices, wearables, home computers, and mobile phones shoot up.

But this increase in demand has also exacerbated a problem for the industry a global shortage in computer chips, or semiconductors. 

As you might expect, computer chips are an extremely important component of all electronic devices. Dubbed the “brain,” chips essentially control most device processes, such as performing mathematical equations, making decisions, creating instructions, while acting as the memory unit for the entire computer.

So why is there a chip shortage? We hear you ask. How is this affecting IoT? And is there a solution? Keep reading to find out. 

What is a Computer Chip?

A computer chip or semiconductor is essentially a printed set of electronic circuits on a piece of material, which is usually a silicon board. 

Wondering who makes IoT chips? The answer is extremely skilled developers. 

Over the years, developers have been able to fit increasing amounts of complex circuits into chips that are only decreasing in size, allowing the technology to become faster and more developed over the years. 

Why Is There a Microchip Shortage?

To start with, let’s go back to the origins of this crisis. 

Because of the sheer complexity of the technology, problems with chip manufacturing date back to before Covid-19. 

The simple answer is that making computer chips is extremely difficult. The process takes months, sometimes years, and the more advanced the technology becomes, the longer it is taking developers to make it. 

Making chips also require specific conditions. For example, chip-making machines must pass through a “clean room” before putting any silicon into computer chips. This allows them to ensure absolutely no dust particles enter the chips, which could damage hugely expensive circuit structures.

However, there’s no denying that the pandemic and its ensuing lockdowns exacerbated the chip shortage, starting from when factories temporarily closed when Covid-19 first hit. 

Now though, the shortage is more linked to a change in habits during the pandemic, during which the demand for smart technology dramatically increased.

For example, a study by home electronics company Xioami recently revealed that since March 2020, 70% of its customers reported making changes to their homes after spending more time in them during the pandemic. More than half also reported buying at least one smart device over the lockdown period. 

In order to fill their newfound free time at home, consumers have also been buying new TVs, games consoles, smartphones, wearable devices, smart home products, and laptops to enable them to work remotely. 

How is This Affecting IoT?

While the industry worst hit by the crisis has been the automotive sector, unfortunately, the global chip shortage is having a pressing impact on the IoT industry. 

Approximately 80% of global manufacturers are facing challenges in producing digital products, many of which work using IoT.

The most immediate impact that this is causing is a delay in software development cycles, and therefore a delay in producing IoT devices. 

In the long term, this will affect the advancement and improvement of the technology, which will make it difficult to scale the software across different hardware platforms. 

Last year, production delays even caused Apple to postpone the launch of its famous iPhone 12. 

Some analysts have also noted that the global chip shortage is seriously affecting those who work in the IoT industry, with developer burnout becoming a real concern. If this worry turns into a shortage of developers, it also has the potential to compound the chip shortage problem.

Is There a Solution?

Have you found yourself impatiently Googling “when will chip shortage end?” Well, the bad news is that you could be waiting a while. 

According to laptop manufacturer Acer, tech companies could be affected by the global chip shortage until at least 2022. Other predictions suspect the problem could continue to wreak havoc until 2023

In the meantime, however, tech companies can try the following solutions to tie themselves over: 

  • Prioritize cross-platform software libraries to reduce developer workload
  • Alter production schedules to reflect realistic expectations 
  • Adjust order books and prices to accommodate for supply chain disruption 

Other, more drastic ideas include: 

  • Redesigning the printed circuit board (PCB)
  • Finding other, commercially viable components

Can IoT Help?

Some industry experts suggest that the IoT industry can provide creative solutions to the semiconductor chip shortage. 

Indeed, IoT devices can help predict disruption to the electronic consumer device industry supply chain before it happens, leaving it better prepared in the face of adversity. Features such as real-time data sharing and analysis, for example, can also help manufacturers develop resilience to supply chain changes.

Just as IoT devices can collect data to prevent disruption, they can also collect data to analyze supply chain performance and identify problems, which can ultimately be used to iron out inefficiencies in the supply chain process for the future.

With the help of IoT data, supply chain managers can become more proactive to industry problems, rather than reactive when it becomes too late. 

To find out more about Nabto’s creative IoT solutions, check out the resources on our website.

Final Thoughts 

In the face of an ever-growing demand for devices that require microchips, it is simply not an option to sit back and wait for the supply chain to replenish the shortage. 

While at the moment, the IoT industry is suffering from disruption due to the worldwide chip shortage, it may well be the very solution to the problem. 

And in order to make this happen, a great deal of patience, creativity, and hard work will be required. 

Read Our Other Resources

We’ve also published a range of IoT resources for our community, including:

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