Those who were in the market for a gaming console, computer or other products that use high-tech computer chips over the past year may have noticed the supply of such items was more scarce than usual.

This has been most predominantly seen in computers and gaming consoles that use graphics cards and certain display hardware.

Take the Sony Playstation 5 and XBox Series X consoles for example — trying to obtain either of those since their release late last year is like finding a needle in a haystack — but why is this?

Aaron Rhodes, owner of Bradford Electronics, weighed in on the shortage and discussed how it’s not only just affecting big names like Sony and Microsoft, it’s also affecting local businesses.

Rhodes explained the shortage has affected his business in several ways, primarily the manufacturing of gaming computers that require high-end graphics cards. A standard gaming computer that the business assembles cost them $1,200 (low end) to $4,000 (high end) in hardware before the pandemic/shortages. This has caused the price to jump closer to $1,700 to $4,500 due to the scarcity of cards.

Secondly, the shortage has harmed the repair industry.

“Hardware fails. Graphics cards cook, hard drives fail, etc.,” he explained. “The issue is that due to the scarcity of the cards, anyone with a failed graphics card is going to be paying an increased fee for the card and can expect a long wait time. This is especially devastating to people who produce and compile video, 3D animators and 3D modelers. The costs of the cards are preventing repairs and causing people to just give up on repairing their machines.”

As far as the suppliers of such hardware, they’re making great profits, unable to keep hardware on their shelves.

“From what I’ve been told by my suppliers, the chip shortage is only reducing the hardware required to build a card by about 10-20%, compared to 2-3 years ago,” added Rhodes.

To better understand the bigger picture, he said one must look at the buyers, as the following forces are driving up the costs of the cards:

-Scalpers: Scalpers set-up automated software to purchase large quantities of the cards, in order to resell at a much higher price. Such software can purchase items in a split second as soon as they become available, which is nearly impossible for a typical buyer to compete with.

-Cryptocurrency Miners: According to Rhodes, the best way to mine Crypto such as Bitcoin Dogecoin, etc. is with a graphics card, which are often connected together into what is referred to as “farms.”

“Bradford Electronics runs a Crypto farm consisting of 2 scaffoldings of 50 graphics cards each,” noted Rhodes. “This is considered small. There are private citizens with Crypto farms consisting of thousands of cards. There have even been old power plants put online again to secretly mine Cryptocurrency. State operated (government run) Crypto mining is also huge. You see countries such as North Korea and China having farms spanning entire warehouses.”

-The Pandemic: Rhodes explained that chips are produced in factories where the employees are in close proximity to each other. Due to the manufacturing process, it’s considered a “clean” environment, requiring gloves, glasses, head coverings, labwear, etc.

“When the outbreak initially hit, a large amount of mitigation effort was directed towards workspaces with tight working conditions,” explained Rhodes. “This was especially true in the countries where the chips are actually made, such as South Korea, Japan, etc. This caused a shortage spike in the supply when there were already shortages due to a sudden increased demand.”

So when will supply catch up with demand? Rhodes predicts sometime in 2023-2025.

“The manufacturers have been scrambling to get more factories online in order to pump out more chips,” he said. “This isn’t a temporary demand spike though. This is the new demand. The only thing we can really do is wait for more manufacturing to be brought online.”

In closing, Rhodes provided readers with some advice:

“Buy your new hard disk drives and TVs now — those are next. A lot of things are going to be affected if this drags on such as automobile manufacturing, aircraft and avionics and video game consoles.”