February 04, 2022
In the Media

In an article for Abu Dhabi-based The National, Yossi Sheffi writes that while the global supply shortage of microchips may recover, the markets might not return to normal—and they may have actually helped seed another crisis in the form of a global economic recession.

In combination, the above developments laid the groundwork for a jolting increase in demand that was at the heart of the subsequent chip shortage. Governments’ largesse encouraged consumers to start buying again, and demand for products such as home appliances and cars, which are reliant on supplies of microchips, soared. Congestion and reduced capacity of transportation and warehousing afflicted the entire world economy. As consumer spending accelerated, companies struggled to keep up with the sudden turnaround in demand. The abrupt mismatch between supply and demand – and big increases in the cost of transportation and warehousing – dislocated the world’s supply chains, exacerbating product shortages in multiple markets.