The Shortage of Chips May Last for 2-3 Years – Here’s Why

According to the president of Hisense, the largest manufacturer of Chinese home appliances, the global shortage of chips may continue for another 2-3 years. From consumer electronics companies to automakers, most suffer from a lack of semiconductors. This has led to a deficit of devices such as game consoles. Manufacturers are struggling to meet demand. Chinese companies, including electric carmakers, are also in short supply.

Hisense Group Holding Co., a maker of TV.s and home appliances by the Chinese state, has influenced all of this. Qingdao-based company president Jia Shaoqian noted that the production cost of its products had increased significantly, but the business remained stable.

Hisense assembles home appliances and consumer goods. This requires relatively simple chips. Jia noted that most of the chips are imported to China, and the final products are produced there before export.

China-U.S Trade War

China and the U.S. have been locked in a trade war since Trump’s presidency, and this tension continues today. The point of tension became the semiconductors between the two nations. The United States has removed SMIC, China’s largest chipmaker, from American technology.

Several factors have driven the shortage of chips. However, the growing demand for consumer electronics following the pandemic amid a worldwide blockade is one of the most obvious. The U.S. trade war with China also led to corporations stockpiling items.

According to Jia forecasts, if there are no significant problems with the global trade dispute, it is entirely possible to solve the chip deficit in 2-3 years. However, if trade and economic sanctions between the countries continue, the estimated time to recover the debt will be longer. Chief executives predict that the shortage of chips will continue until 2022. Some even think that it will take more time.

Conclusion

Hisense has been trying to expand its brand in some significant markets over the last few years. The company sponsors Euro 2020 and World Cup football tournaments; Consequently, it has healthy ambitions to expand beyond China. Hisense is currently trying to expand by acquiring foreign brands and licensing deals. The company has also increased production abroad, opening offices around the world.

Currently, 40% of Hisense’s revenue comes from overseas. Jia said he hopes 50% of the company’s business revenue will be from outside the country in the next 3-5 years. The next part of the giant’s international push will develop Hisense, its brand products.

The company’s president believes that the negative attitude towards Chinese brands will not hinder Hisense’s pursuit of global growth.