From electric cars to smart fridges and e-cigarettes, the world is experiencing a global manufacturing slowdown as a shortage in semiconductors continues to push back new product releases and delay production cycles.
According to an analysis by Goldman Sachs, the chip shortage directly affects 169 different industries, with the automotive industry being especially hard-hit. Korean electronics giant Samsung has also announced its strategy to prioritize the use of chips for more in-demand products, with the company saying it might have to postpone the launch of its high-end smartphone due to the shortage, despite also being the world’s second-largest producer of chips. With these extended production times comes increased expenses for manufacturers and the potential for that to raise the prices of consumer electronic goods.
Semiconductors can be found in nearly all modern electronic devices, including e-cigarettes, where the chips allow for a smarter, safer, and more easy-to-use experience. Amongst other things, the chips in e-cigarettes are responsible for power control, current stability, temperature monitoring, puff counters, identifying vapor, and controlling inhalation settings. The addition of these core components means e-cigarettes are now more reliable, accessible for new users, and provide an overall greater vaping experience.
For chip manufacturers, the deficit means that supply will be unable to outpace demand for months and possibly years to come as enormous backlogs of orders continue to grow. Moving forward, manufacturers across industries, including e-cigarettes, are to experience a degree of disruption that may see slower product release cycles, higher costs, and limited supply in the coming months.
Happening alongside the chip shortage, consumer demand for e-cigarettes continues to grow. From 2021 to 2028, the E-cigarette industry is expected to expand at a compound annual growth rate (CAGR) of 28.1%, according to a report from Grand View Research, leading onlookers to speculate whether this emerging industry will be able to sustain its rapid growth rate as important components become scarce.
The world’s largest tobacco company, Phillip Morris International (PMI), has since 2017 switched its traditional business towards heat-not-burn devices, and like all e-cigarettes, PMI’s IQOS relies on semiconductors to operate. Mirrored across the industry, this dependency has the entire space keeping a close eye on the developing chip shortage.
As it currently stands, there is no end in sight for the chip shortage, with the supply shortage currently rising at all points in the supply chain. Consumers facing growing uncertainty as a result of product scarcity are inclined to take extra precautions as the world looks likely to experience a global shortage of cars, phones, and e-cigarettes.
