Jan 03, 2022It's a new year, and many are hoping 2022 will alleviate some of the pitfalls of 2020 and 2021. Although the Omicron variant is spreading like wildfire and affecting the vaccinated and unvaccinated alike—members of my family and my wife's family are currently recovering from COVID-19, in fact, as are several of our friends and the family of my son's girlfriend—this variant, while virulent, is primarily causing only minor symptoms in those who have gotten their vaccine and booster shot. Nearly all COVID-related deaths are now among those who refuse to be vaccinated (so please do get vaccinated and boosted).
Many have suggested that in 2022, the disease's status will change from pandemic to endemic, which is great news, and antiviral drugs to treat those at high risk are now becoming available. During the pandemic, a number of factors led to what was dubbed an "everything shortage," including insufficient quantities of raw materials, congested ports, the closures of multiple factories and a lack of available drivers to move product-filled trucks. This was compounded by other factors affecting the worldwide economy, including the trade war between the United States and China, as well as a slew of severe weather incidents. As a result, the supply chain broke down at pretty much every level.
These supply chain issues are anticipated to improve in the coming year, some have predicted. Meanwhile, unemployment in the United States is falling, the World Health Organization has approved a malaria vaccine and some companies and governments are taking climate change more seriously than they have in the past. In other words, amid all the disease and disappointment and political upheaval, the news is not all bad, and there is reason to have hope as we move into the third year of the coronavirus.
One prevalent problem has been the global chip shortage that has persisted since 2020. During this ongoing crisis, the demand for integrated circuits has outpaced the supply. Analysis conducted by Goldman Sachs has indicated the semiconductor chip shortage affected a whopping 169 industries, ranging from steel and concrete manufacturing to air conditioning technologies, breweries and soap production—and, of course, radio frequency identification (RFID) and Near Field Communication (NFC) technologies. This has resulted in sharp rises in pricing, long customer queues, and the general unavailability of new computers, video games, vehicles, graphics cards and other products in which integrated circuits are used (which, in today's world, are many).
During the Christmas holiday, my family experienced the latter problem first-hand, as we undertook the nightmare known as car shopping. My wife and I visited dealership after dealership, only to face the same conundrum at each location: a surprisingly low number of new cars on the lots and a shockingly high sticker price for preowned models. We saw cars with 45,000 miles being sold for what new cars were going for only a few years ago. The reason we were given each time was "the chip shortage," which has made it difficult for car companies to provide dealerships with new vehicles.
On average, a car might contain around 1,500 chips—and some models have double that amount. Without chips, many manufacturers have had no choice but to park thousands of unfinished vehicles they can't sell, and some have had to lay off workers. The lack of available vehicles has driven up the demand for well-maintained used cars, and dealerships have been quick to capitalize on this by boosting price tags by thousands of dollars per vehicle. Everywhere we went, we immediately received top-dollar trade-in offers for our existing SUV, even after explaining that we're adding a car to the household, not trading one in.
Unfortunately, the chip shortage is expected to continue into 2022—but there is a bright spot. JPMorgan told CNBC that an increase in available supplies may see the situation modestly improve during the second half of this year, leading to a potential return to normalcy in 2023. Other experts agree that an end to the shortage is in sight, albeit not immediately. The automotive sector is one area in which it may take longer for the situation to fix itself, much to my and my wife's frustration because we need a car now.
In the meantime, we can hope these cautiously optimistic predictions will extend to the RFID sector as well. Many chip manufacturers are located in China, and the above-noted trade war has limited the number of RFID readers, antennas, embedded modules, evaluation kits, labels and tags. But after two years of non-stop clouds, we may finally be seeing a hint of light break through. Here's to a better year ahead for all of us.
Rich Handley has been the managing editor of RFID Journal since 2005. Outside the RFID world, Rich has authored, edited or contributed to numerous books about pop culture. You can contact Rich via email.
