How the Chip Shortage Could Decimate the AV, UCC and Digital Signage Markets and How You Can Avoid Its Effects

high purity tungsten target semiconductor chip

Do not underestimate what I am about to tell you. In case you haven’t been reading the tech sections of the newspapers lately, there’s a global semiconductor shortage (branded as the “chip shortage of 2021”) and, although it hasn’t affected our market yet, it will, starting in late July.

So, who cares?

Well, you’d better, as it could mean that you have millions of dollars of orders being held up by one or two small products that kill your ability to install the entire system. And, worst of all, it could happen right as we are trying to climb out of the COVID-19 backlog.

Here’s what’s likely to be the scenario: As you all know, the magic in an AV system comes from the glue — the hundreds of signal processors, switchers, adapters and converters that make all the sources work with the displays. Some of these are inside the monitors, projectors, speakers, lighting systems and LEDs and some are external. And, there are usually dozens — if not hundreds — of them in a typical system when you count up all the “black boxes” that connect video, audio, control, networking and single management together. Well, nearly every one of these little boxes or converters has a programmable chip of some type inside of it that drives it. Without these chips, you can’t build them. And, without those boxes, you could have $250,000 worth of sources connected to $650,000 worth of speakers, monitors, LEDs and projectors all unable to be connected together as there’s no glue. And remember, some of these chips are being used inside the most popular monitors, projectors, lighting systems, mixers, speakers and DSP-based products on the market, too.

Why is this happening and how do we overcome it?

This article from earlier this week from the Wall Street Journal does a great job of chronicling what’s going on globally. Go read it and then come back for more from me.

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Now, since you’ve read it, you should understand that we (or tiny segment of tech) are on the tail-end of this shortage food chain. Unlike the consumer electronics and home appliance markets, we have longer lead times as well as longer design and production cycles and we plan accordingly. Thus, by the time the consumer market saw what was coming, we had our current supply of gear already in production, but not the next production cycle, however. So, we’ve not been affected by it until now. In fact, over the past few weeks, I’ve spoken to more than two dozen of our industry’s biggest manufacturers and only two of them told me they weren’t being affected by it now. All but four of them said that we (at the end of the supply chain) haven’t experienced the impact of it yet — that their supply chains and channels have had enough product to offset the shortages. When I asked them when and if we would feel it, all but one company said we would by the end of the summer.

I’ll let that one company tell you themselves — as it is planning a marketing blitz to the industry when its competition starts to experience inventory shortages, but suffice to say, you’d better firm up our vendor relationships and have backups for your bac-ups when it comes to products. All of them.

Please don’t shoot the messenger. I am simply trying to help you get in front of this before this issue directly affects you.

The good thing is there’s more than one way to design an AV, UCC and Digital Signage system — but that requires either foresight or time. Hopefully you now have a reason to at least plan for the latter.