A shortage in a $1 chip is slowing the production of everything from gaming consoles to automobiles

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A crisis in the semiconductor industry has been slowing the production of tech hardware, like the PlayStation 5 and Xbox Series X|S, for months during the course of the pandemic. Well, a new report shows that this shortage is going to continue and bleed over into other markets because of a lack of supply of a chip that can be produced for around a dollar.

Bloomberg recently reported that a large part of the crisis in the semiconductor industry can be pointed to what is called a display driver. In comparison to other processing chips, the display driver is a relatively simple one that’s purpose is to light up the display on things like smartphones, TVs, and laptops. The chips are also beginning to be needed by companies that are beginning to add LCD screens to their products, like automobiles, refrigerators, and airplanes.

During the pandemic, many companies did not know what to expect in terms of demand. Using previous crisis models, like the 2008 housing market crash, many companies believed that demand would decrease drastically as people came upon tough financial times.

For the tech industry, the exact opposite happened. People were working and going to school from home, so they had to buy new computers and monitors. They also weren’t going out, so demand for things like televisions and gaming consoles also went up. That, coupled with the growing number of products requiring these display drivers, led to a great decline in the supply of the chips.

There’s no real answer for the chip crisis yet

Because this is a relatively simple and inexpensive chip, there aren’t a lot of companies that produce display drivers. The current production has also been fine-tuned for years to make the display driver creation process as efficient as possible, and establishing new production would be very expensive and inefficient.

Jordan Wu, co-founder of Himax, one of the companies that produce display drivers, says that while business is booming for the company, he is not very happy. He said, “Building new capacity is too expensive…We have not reached a position where we can see the light at the end of tunnel yet.” Unfortunately, it looks like the shortage of display drivers isn’t going to be resolved any time soon.

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