The Cost of Components – How Supply Chain Disruptions Affect Innovation
Hardware component shortages and rising costs are reshaping the landscape of hardware engineering.
The global supply chain for hardware components has faced unprecedented challenges in recent years. From semiconductor shortages to rising raw material costs, the landscape of hardware engineering is shifting.
The Semiconductor Crisis and Its Ripple Effect
Semiconductor shortages have disrupted industries, from automotive to consumer electronics. The UK, Europe, and the US are striving to reduce dependency on Asian manufacturers by investing in local chip production. The US CHIPS Act, which allocated $52 billion to domestic semiconductor production, and the EU’s €43 billion European Chips Act, are direct responses to supply chain vulnerabilities.
Cost Implications for Businesses
The increasing cost of essential components such as microprocessors, memory chips, and sensors has led to higher production costs. For example, semiconductor fabrication costs have risen by 15% year-over-year, forcing companies to rethink their supply chains and manufacturing locations.
Solutions & Future Outlook
To mitigate risks, businesses are diversifying supply chains, investing in domestic manufacturing, and adopting sustainable material sourcing. Upskilling local talent through training initiatives in chip design and fabrication can reduce reliance on international supply chains, strengthening economic resilience.
