It is quite likely that at least once in your lifetime, you have delayed changing your mobile service provider, even though it was a few-step process, and would make your life better. We’re all guilty of putting off big and small technological changes that could help us – both in life and in business.
But, in a world where the supply chain for both automobiles and aftermarket telematics devices is constrained, you don’t have a choice. Supply chain constraints affect not only the availability of vehicles but also the accessibility of aftermarket telematics devices. Telematics information has traditionally been the preferred option for fleets seeking to effectively manage driver behavior and monitor vehicle movements via extensive statistics.
Due to the obvious coronavirus pandemic and other supply chain breakdowns, the global microchip shortage has caused considerable slowdowns in order fulfillment for many types of systems that require these components. This global microchip shortage has hit automotive OEMs, mobile device manufacturers, and GPS device manufacturers especially hard. According to various industry projections, the global microchip shortage will continue this year and into 2022.
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What is a Microchip?
A microchip (also known as a chip, a computer chip, an integrated circuit, or IC) is a small flat piece of silicon that contains a collection of electronic circuits. Transistors on a chip function as a mini electrical circuit that can transform a current on or off. On the silicon wafer, the pattern of tiny switches is increased by connecting and separating materials to form a layered lattice of interconnected shapes.
Why are Microchips Essential Components in Telematics?
These microchips are found in places such as vehicle infotainment systems and other electrical components. They are known as the controllers of various vehicle functions. These tiny chips are an important component of the automobile and technology industries, as well as the foundation of vehicle telematics.
Microchips, also known as semiconductors, are widely termed the brains of modern technology. Semiconductors play an important role in our lives because they are used in the manufacturing of electronic devices.
Electronic devices have become more compact, faster, and more dependable as semiconductor technology has advanced over the last 50 years. Consider all of your interactions with electronic devices in the last few hours. Microchips are genuinely a technological miracle, an unrivaled feat of human creativity and engineering. That pretty much sums up why a semiconductor or microchip shortage has such a massive impact.
What Factors are Responsible for the Current Global Microchip Shortage?
- First and foremost, the COVID-19 pandemic, which raged across the globe like a raging bull, had massive ramifications for various sectors of human activity, affecting every type of livelihood and production process. Various factors related to the pandemic, whether directly or indirectly, have impacted the production of microchips or semiconductors, and thus the automobile and technology industries as well and caused the global microchip shortage.
- Furthermore, many businesses around the world updated their interfaces significantly in order to incorporate work from home, which increased the demand for microchips in that sector as well.
- As a result, a variety of factors influenced the stockpile of microchips in the automotive and technology industries. Rather, the lockdown shifted the demand-supply balance between the microchip and automotive industries.
- So far, everything was fine until automobile production resumed and the popularity of vehicles increased. When the global lockdown restriction was lifted in the latter half of 2020, automobile sales increased slightly, much to the joy of the manufacturers, owing to pent-up demand and a shift in choice for personal mobility.
The global microchip shortage became apparent here, as all industries were suddenly looking for the small chips for their corresponding product manufacturers.
What Implications Does Global Microchip Shortage Have On:
The global microchip shortage has implications that go far and wide. The industries it has primarily affected are:
Telematics
Microchips, also known as semiconductors, are widely termed the brains of modern technology. Semiconductors play an important role in our lives because they are used in the manufacturing of electronic devices. They are known as the brain of various vehicle functions. These tiny chips are an important component of the automobile and technology industries, as well as the foundation of vehicle telematics.
Automotive (Trucking)
Class 8 trucks need between 15 and 35 microchips per vehicle. Trucking is inextricably linked to the microchip supply chain. What changes in supply and demand must be as in sync as feasible with transport and distribution. This creates a kind of double-edged sword for the supply chain industry. Carriers must navigate a limited quantity of Original Equipment Manufacturer (OEM) heavy-duty vehicles while navigating the shortage.
Supply Chain
Since the microchip shortage has affected both trucking and telematics industries, it is natural that it has also correspondingly affected the supply chain.
Approaches to Battle the Global Microchip Shortage
The technology sector is already taking significant steps to alleviate the global microchip shortage.
- Money invested in current and emerging chip manufacturing infrastructure is a no-brainer, and the majority of companies are already doing so.
- Improving yields, or the number of chips that can be successfully produced from a silicon wafer, is yet another area in which companies have made significant investments.
- A more promising approach is to accommodate older chip technologies, both in terms of manufacturing and engineering. Used semiconductor equipment denotes manufacturing capacity from prior chip generations that are no longer cutting-edge.
- Unlike hardware, the software has the ability to be globally deployed at the rate required to keep the industry’s promises.