Chip Shortage Keeps CIOs and Other Tech Leaders Scrambling
Across the economy, corporate tech leaders are dealing with dwindling supplies of the physical building blocks of IT
Case Western Reserve University in Cleveland is seeing weekslong delivery times for computing devices, said Sue Workman, the school’s chief information officer.
PHOTO: CASE WESTERN RESERVE UNIVERSITY
Aug. 9, 2021 3:55 pm ET
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Companies inside and outside the tech sector are feeling the pinch of the global computer-chip shortage, which is stalling orders and raising prices on laptops, printers, smartphones, videoconferencing equipment and other work gear, corporate technology chiefs say.
Many of these organizations are under added pressure to upgrade computer hardware as they take steps to reopen their physical offices, as well as continue to supply remote staff with business-grade mobile tools, they say.
â€œWeâ€™re seeing 10- to 12-week delivery times for laptops and computing devices,â€ said Sue Workman, chief information officer at Case Western Reserve University in Cleveland. â€œThose used to take a day or two.â€
For the rapidly approaching fall semester, the school is hustling to equip classrooms with video displays, microphones and other tools so students have the option of taking some classes from home, Ms. Workman said. Orders for both displays and microphones have been delayed, she added.
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In the past, IT resellers that bundle software apps with computer hardwareâ€”known as value-added resellers, or VARsâ€”could fill unexpected supply gaps for laptops and other devices, she said.
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â€œThey are out, too,â€ she said. â€œThey donâ€™t have any inventory.â€
Other companies are feeling the downstream effects of the shortage on their corporate customers. TransUnion, a Chicago-based firm that provides credit-check analyses for more than 60,000 businesses, is seeing customers in sectors like automotive and telecommunications hit by shortages.
â€œWeâ€™re seeing some supply-chain challenges,â€ said Abhi Dhar, chief information and technology officer at TransUnion. â€œWe see it in the marketplace, our customers are seeing it.â€
Internally, the companyâ€™s technology partners have helped shore up IT needs where challenges exist, Mr. Dhar said.
â€œIt is affecting our supply chain, which is ironically making us get better at something we should be better at anyway, which is forecasting where weâ€™re going to need infrastructure,â€ he said. TransUnion is in the middle of migrating systems to the cloud. â€œWe canâ€™t just keep buying it,â€ he said.
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From schools to financial firms and grocery stores, the world-wide chip shortageâ€”which comes amid soaring prices for silicon wafers, and the resins and metals used in their manufactureâ€”is rippling through supply chains. It is causing tech-hardware manufacturers to idle factories, vendors to put orders on hold and has left enterprise IT customers in limbo, industry analysts say.
Across the economy, chief information officers and other tech leaders are dealing with dwindling supplies of the physical building blocks of IT, items like liquid crystal displays, images sensors, integrated circuits and processors, said Mario Morales, group vice president for enabling technologies and semiconductors at industry research firm International Data Corp.
â€œSuppliers are operating at full capacity and are not expected to catch up until the end of this year,â€ Mr. Morales said.
Large global chip makers, including Intel Corp. and Taiwan Semiconductor ManufacturingCo. , say they are adding new production plants to meet surging demand, though some of that capacity wonâ€™t be available for about two more years. Last month, Pat Gelsinger, Intelâ€™s chief executive, said he sees the semiconductor shortage possibly stretching into 2023.
Plantronics Inc., a Santa Cruz, Calif., company that makes high-end headsets and speakers for corporate videoconferencing and collaboration tools, in recent weeks began placing orders for computer chips more than a year in advanceâ€”roughly double the amount of time it would have a year ago, said Chief Executive Dave Shull.
Just in the past few weeks, a longtime supplier of integrated circuits had to back out of a delivery after running low on raw materials, Mr. Shull said. Setbacks like these have slowed production at Plantronicsâ€™ factory in Mexico, leaving CIOs at its Fortune 500 customers pacing in the wings.
Jason Eichenholz, chief technology officer of Luminar Technologies, in a 2017 photo.
PHOTO: BEN MARGOT/ASSOCIATED PRESS
â€œThereâ€™s chips in everything we ship out,â€ Mr. Shull said. â€œBut we have more demand than supply.â€
The company, which does business as Poly, has yet to raise pricesâ€”though margins are taking a hitâ€”as it scours the market for â€œsecond or third sources for options,â€ he said.
Orlando, Fla.-based Luminar Technologies Inc., which makes visual sensors for self-driving cars, last month announced plans to acquire OptoGration Inc., one of its longtime chip suppliers, in a continuing bid to be less reliant on the global market. Four years ago, Luminar bought Black Forest Engineering, now its chip-design subsidiary. Terms of the deals werenâ€™t disclosed.
With the purchase of OptoGration, which is expected to close in the third quarter, Luminar will secure a supply of roughly one million chips a year, the company said.
Though initial talks with OptoGration predate the current chip shortage, the state of the market helped push the deal ahead, said Jason Eichenholz, the companyâ€™s co-founder and chief technology officer.
â€œWe design these systems from the chips up,â€ but because the companyâ€™s highly-customized chips will be made in-house, Luminar is insulated from the global shortage, Mr. Eichenholz said.
â€œItâ€™s not something Iâ€™m worried about,â€ he said. â€œI donâ€™t have another manufacturer coming in to scoop up my chips.â€
1.What is the main point of the article? State in one paragraph.
2.Discuss what kind of environmental change it is â€“ internal/ external? Use categories listed in your text.
3.What company / industry has been affected?
4. How did the affected company (companies) respond to this change? Discuss in general terms how a company would respond to a change like this.