Many users in Germany and elsewhere want to buy a PS5. But there are too few available. Reports suggest that the limited supply of the new PlayStation 5 is due to the shortage of a single component. What exactly is behind this?
Many hope that manufacturers like Sony or Microsoft will produce more consoles so that the bots and scalpers can’t continue to thrive, buying up consoles and then selling them at high prices on eBay.
However, this is not that simple, as the real reason for the few consoles is a single component. This is about semiconductors, which are needed almost everywhere.
Due to COVID and the high demand for devices for home office use such as computers, monitors, or graphics cards, the demand for semiconductors is also increasing, as new reports show.
Semiconductors are needed everywhere and in higher demand than ever
Who needs semiconductors at all? Semiconductors are used in numerous fields. These include, among others:
- Processors and graphics chips
- Cars
- Optical devices such as cameras
- Fridges
- Power supplies for other devices
In everyday life, you’ll encounter semiconductors in many places. Without semiconductors, you couldn’t use your computer, your smartphone, or other everyday devices. Without semiconductors, you wouldn’t even be able to turn the ignition key in your car.
That’s why they are in high demand: Due to the pandemic and the lockdown, the demand for home office devices is rising. A significant number of semiconductors are needed for this.
People want laptops, printers, or gaming consoles, and this starts a race for production. Because people want more devices, that means more semiconductors are needed.
However, while the need for certain products increases, semiconductor manufacturers can hardly keep up with production. This is leading to greater shortages.
Numerous manufacturers are affected by semiconductor shortages
Where do these shortages come from? To understand where the shortage comes from, one must look at semiconductor manufacturing. Chip manufacturers are supplied by other manufacturers with so-called wafers. These are discs of highly pure silicon onto which the circuits are applied in a complex process.
According to Bosch Press, the manufacturing process to create semiconductor chips from wafers can take up to 14 weeks, as it involves complex processes: The silicon used must be particularly pure.
The company Moor Insights deals with the semiconductor industry. In an interview with CNBC, the company’s founder, Patrick Moorhead, explains what started the shortage:
The current chip shortage begins with the unprecedented demand for computers and peripherals as the world worked and went to school from home.
Due to the COVID pandemic and the US Trade War with China, production of important semiconductors has declined. A manufacturer like Semiconductor Manufacturing International (SMIC), one of the largest Chinese chip manufacturers, therefore had problems exporting enough semiconductors to the USA. However, manufacturers like AMD or Qualcomm, who need them for their products, are based here (via CNBC.com).
Who is affected by the shortage? Many manufacturers are affected by the shortages. Besides hardware manufacturers that produce consoles, smartphones, or computers, for example, car manufacturers are also struggling.
This is mainly because electric cars require significantly more semiconductors than conventional vehicles. As a result, suppliers like Siemens, who supply car manufacturers like VW in Germany, need significantly more.
Due to COVID, people became increasingly interested in entertainment electronics, which is why many chip manufacturers primarily supplied these (via Süddeutsche.de).
The most important chip manufacturer for the PS5 is still AMD
That’s why AMD is so important: AMD produces all the chips for the next-gen consoles. This includes not only the PS5 but also the Xbox Series X|S. However, AMD also manufactures processors and chips for graphics cards. Due to the home office boom, the demand for graphics cards has also increased. This also applies to relatively old graphics cards that have increased in value due to COVID:
Without the appropriate chip from AMD, Sony cannot produce more consoles. However, as long as AMD only has limited resources and capacity, this means there cannot be more consoles.
What does the future look like? AMD is aware of the problems and shortages and wants to address them and increase capacity. Lisa Su, AMD’s CEO, explained in an interview with Venturebeat that they intend to increase production, but that it will take some time.
As for semiconductors, we are building significant capacity to meet this demand. This is an opportunity, and we love this opportunity. But it takes some time to catch up. (…) We just need to ensure that we accurately forecast demand and work closely with our partners to make this capacity available.
Until the capacity is available, consoles are likely to remain in very limited supply. Until then, scalpers and bots buying up numerous PS5 consoles will continue to be a major problem for honest customers.
