The computer chip shortage is a great demonstration of change

It is funny the thinking was 15 years ago that everything already had a computer in it. But really we have NOW sudden hit a moment where the necessity for true computing in appliances and cars has started.

Car don't get automatic cruise control, passing lane alerts, reactive wheel steering & breaking without REAL computers under the hood. Our devices that merely needed simple controller chips now need real number crunching and operating systems. All cars manufactured today contain at least one computer. It is in charge of monitoring engine emissions and adjusting the engine to keep emissions as low as possible at the very least. More advanced systems might receives information from a many different sensors, including: oxygen sensor, air pressure, air temperature, engine temperature, throttle position, brake sensors, knock/stall sensor, front and rear vehicles LIDAR, Side cameras or LIDAR, airbag deployment speed, climate control balancing, keyless entry or a security system.

In ovens, microwaves, light bulbs, refrigerators and dozens of other appliances in the home now have sensors and those sensors change the operation of the devices with computers. Not mere controller boards, but sensor determined choices interprets by algorithms running on computers. One of the more mundane computers is the ones in most TVs now. I think the only HDTVs that are not smart are the cheapest 24" models, most TVs over $200 are smart TVs with ROKU, Apple AirPlay 2 or Chromecast built-in. And if not those they have the ability to run updatable apps for Netflix, Disney+, YouTube, etc. Moreover, all but the cheapest TV for better or worse have computer control of backlights, image rendering, frame-rate changing, upscaling, etc. Our HDTVs have - must have - operating systems.

We are currently at the third rise of the small computer. The first rise from mainframe to personals computer occurred in the late 70s and early 80s. Then a second or their rise with MP3/AV-Players, netbooks, tablets, and smartphones. Thus, I would say the third rise of the small computer started very small in 2012 with the first Raspberry Pi. Raspberry PI is a SBC or single board computer. At that time, they were little more than a hobbyist toy with a few dozen hobbyist uses when item was introduced mostly robotics and small automation tasks. Now SBC are beyond nerd hobbies and school robot clubs, they are the micro servers in people's homes, the base for retro-gaming, or the brains of various drones or devices like 3D printers. SBC are a growing segment if you want to know how far SBC has come consider there are not military and space rated single board computers. Systems that are made for the battlefield and low-earth orbit, not just the middle school robot lab. And of course SBC are made by hundreds of manufactures at price range from $10 to $300.

And, that is here I think the chip shortage comes in. Yes, we just has a worldwide pandemic, that cannot be understated for having effects on teh supply or parts for electronics on every level. Tet, as I said above; it hard to buy a vehicles, tv, monitor, appliance, or military weapon that does not require a full fledge computer or sophicaticted SoC within it. With have many devices that once used simple microcontroller chips. The difference between Microprocessor (a Central Processing Unit on a board with other discrete chips) to a Microcontroller that might contains a CPU, Memory, I/O all integrated into one chip - system on a chip- (SoC) is one level that is very wide. But in that past the most microcontrollers needed could be rather simple: on vs. off, at-temperature vs. over-heating, timer, etc. It seems increasingly that devices need sophisticated SoC or full blown multi-chip PCBs -i.e. a computer that can run and monitor various sensors and make various programmed choices. We hit a point where the demand for computers of all sizes are far outstripping supply; meanwhile, new decies are being created that are engineered to need more computing power from the outset.

Long story short the supply of all sort of chips for various devices, vehicles, and appliances will not be solved quickly. It will take years to build capacity again because there is not a single industry that will slow down or lighten it demands for computer chips. I don't see there being a sufficient supply of PS5, XBox-X, video cards, or many CPUs for a VERY LONG time. The PS5 and XBOX -X might be in short supply for their entire main run.

All this is true, but you've kind of glossed over the ability of capitalism to ramp up production capacity in response to demand. That's kind of the whole thing about capitalism. The pandemic made that much harder but it will get easier again.

Also we're talking about Sony and Microsoft here. Microsoft is like the second or third largest company in the world by market cap, and their CEO said they are "all in" on gaming. Sony is a major electronics manufacturer. Both have relationships with chip producers that go back years. If anyone can get to the front of the queue it's Microsoft and Sony. Microsoft is a larger company than basically anyone else they're competing with. I'm sure car companies and plane makers can outbid them just because the value of the items the chips go in is so much larger than the value of an Xbox or PlayStation, but microwaves and refrigerators? Cheaper items being made by smaller companies, not really competition.

The chip shortage will continue in general for quite awhile but I'm pretty sure that companies the size of Microsoft and Sony can sort out their supply chain within a year or so. Demand may also drop a bit because people are getting out more and are not stuck inside gaming, so their need to get the latest Xbox and PlayStation may not be as great.

What I could see happening here is something like Nintendo scrapping or pushing back its plans for a Switch Pro because getting the new chips is just too much of a PITA. Also companies like Atari and Intellivision that are tiny might find themselves SOL when trying to buy parts because they don't have the market power of a Microsoft or a Sony.

The issue with Nintendo is compounded by the fact they also need to fight for panels/displays. The earlier rumors of a Switch Pro suggested they were going to use a Samsung-based OLED display, which I found highly amusing considering Apple just bought approximately 60% of Samsung's small OLED display stock to secure the supply chain for the new iPhone.

If Nintendo honestly thinks it can fight Apple and live to tell the tale... I don't even.

Oh well, we better wait until COVID-19 ends to see how will the production continues.

@zombiepie: The other thing about Nintendo is that it hates losing money on hardware. That means that they're not going to pony up extra cash to get a new SKU into the marketplace, especially a new SKU that might sell to current Switch owners who may not even buy more games than they would have with their old Switch.

Compare that to Microsoft. They've proved they're willing to lose money on hardware in the past, they have a incomprehensibly large war chest, and they are eager to make up ground to Sony. One way to do that is making sure that your supply is large enough to meet demand and maybe get people to buy a Series X they can find vs a PS5 they can't (PS5 is currently in the lead but that's because Sony was anticipating more demand; shortage aside PS5 is already being produced at a higher clip than PS4 so Sony's supply chain has been good except for the unpredictable surge in demand.)

Microsoft is all in on Gamepass and I'm sure that they are seeing that every Xbox sold is worth like 0.6 Gamepass Ultimate subscriptions or something. So even if they lose $50 on each Xbox they would make that up in 6 months of subscription. Getting their systems on store shelves fast is very valuable to them.

I don't personally even think this will be the case for more than another year at most. I'm a computer engineer at a smallish microprocessor company (<100 employees) and we have a new chip taping out in July; the fab turnaround time for us to get the hardware back is something like a few months. Obviously we're working on a smaller scale in number of units, but if we can get shit like this done, there's no way that huge companies like AMD or whoever makes the other chips/chiplets that the consoles need/are short on can't get production ramped on a mass-market consumer good pretty soon.

As one of Giant member said "Oh well, we better wait until COVID-19 ends to see how will the production continues".i'm totally agree with his statement.

Sounds like baseless fearmongering for me. New computer CPUs are already available at regular prices. There was a Ryzen shortage for a while but that has already been solved, you can pick up one at any time. GPU shortage is also improving due to falling crypto prices, my local supplier has 3080s and most other cards in stock, they are still way overpriced but that is an improvement on what happened 6 months ago when literally every card was selling out for whatever price, and these prices will come down again to more reasonable levels.

The PS4 sold 114 million units in its lifetime. Let's say that regardless of the pandemic Sony would be happy if they had sold 20 million PS5s by now. That is a small number compared to all the cars and fridges out there. They don't need to produce that many units to satisfy demand and like others have said I'm sure they're pretty high on the Very Important Company list for most suppliers.