Coping with the chip shortage: Long waits, short fuses

Frustrations mount  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

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Supply-chain pain The news • Hoarding for the holidays. The global semiconductor shortage is getting worse, with longer wait times and consumers stockpiling purchases in response. The effects are being felt by more than just carmakers and home-appliance manufacturers, the first groups to bear the brunt of the shortage. Makers of other products, including medical equipment, are struggling as well. [WSJ] • Powering up PCs. Almost two years into the COVID-19 pandemic, the tech industry has become more firmly set in the cloud, more volatile, and more dependent on hardware. Remote workers helped drive personal-computer sales to record highs in 2020, with more than 300 million PCs shipped. But chip shortages are contributing to a slowdown in sales, even as profits for chipmakers are soaring. [Economist] Supply chains are honed to deliver efficiency and speed, but the ongoing COVID-19 crisis, as well as severe weather events, are raising concerns about risks to supply networks. Our insights • Why it matters. As climate change increases the severity and frequency of extreme weather, companies are also more likely to experience supply-chain disruptions. Such events could potentially cost businesses up to 200% of lost annual profit and 35% of revenues. Suppliers stand to lose from physical damages to assets, reduced sales, and higher costs after the plant is back in production, since prices may spike following a disaster. • Be prepared. Chipmakers and their consumers alike can adapt by building disaster-proof plants (for producers) and raising inventory levels to help maintain production even if a supply chain is interrupted (for downstream players). As hazards evolve, companies will need to increase investment in adaptation, possibly at the expense of efficiency. See our case study for how to minimize production disruptions resulting from extreme weather. — Edited by Barbara Tierney    Avert danger Was this forwarded to you? Sign up here. Or send us feedback — we’d love to hear from you. Follow our thinking This email contains information about McKinsey’s research, insights, services, or events. By opening our emails or clicking on links, you agree to our use of cookies and web tracking technology. For more information on how we use and protect your information, please review our privacy policy. You received this email because you subscribed to the On Point newsletter. Manage subscriptions | Unsubscribe Copyright © 2021 | McKinsey & Company, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007