When Will the Chip Shortage End?

And How to Steer Your Business Through It

If you run a business—or manage IT for one—you are undoubtedly familiar with the ever-lengthening lead times for critical networking equipment like firewalls, routers, switches, and Wireless Access Points. And yes, you want to know when the shortage will end.

That answer is a little dicey, we admit, but the good news is there are effective methods to blunt the impact on your business. Naturally, there is no one-size-fits all approach, but creative, custom strategies are one of mac-tech’s biggest strengths.

Looking back, the Spring of 2020 saw millions of workers in need of home offices (and exercise). As a result, the demand for laptops, stationary bikes, game consoles, and all manner of technical equipment—and the chips that make them function—surged.

mac-tech’s co-founder and this post’s author, Emanuel Ruffler, writes, “Every business has its individual footprint, and we thrive on understanding both your technical needs and the employees who make your business possible. Our endgame is always to find the best solution for you—no one else.”

Simultaneously, the pandemic tipped off a butterfly effect in the delicately interconnected global supply chain. Delay led to delay, and, in January 2022, Gartner Research issued a report estimating that equipment procurement lead times, up to 200 days and counting, would persist into 2023 before slowly declining^[1].

As valuable as Gartner’s research is, there is really no way to predict when the chip shortage will end. Especially when you consider x-factors like Taiwan, a major chip producer, and its vulnerability to threats from China. China itself is a key chip producer and has already begun hoarding chips in fear of American sanctions.

So, let’s get back to those effective mitigation strategies, and don’t forget we’re here to help. If you’re planning network upgrades, office moves etc. in 2022/2023, device procurement should start now.

We can help.

Are you vulnerable?

If you haven’t struggled with the chip shortage yet, that’s great. Here are a few categories of business that could be blindsided over the next year or two if they don’t factor in those eye-popping procurement lead times.

Companies that have put off upgrades should evaluate their equipment for any looming end-of-life dates. While most devices won’t suddenly stop working it may be possible to negotiate extended support contracts with vendors who understand there are exasperated customers who can’t get the new products they need now.

If your organization has historically employed “lean production” or “just-in-time” methods, start rethinking procurement immediately. Even if it means that some equipment will have to be stored, which isn’t likely, given current lead times.

Small to mid-size businesses, according to Gartner, are finding themselves de-prioritized by vendors fulfilling larger orders for more strategic clients (think those who can afford to throw their weight around).^[2]

Making it to 2023—and Beyond

The interesting thing about ‘interesting times’ is that they prompt us to make better use of what we have and simultaneously embrace the bold and the new. The following strategies represent that dichotomy:

Re-platform to the Cloud—Is the chip shortage the excuse you’ve been looking for? Now is a great time to fully embrace digital transformation. You can avoid buying certain hardware altogether by moving to hosting providers or public cloud providers.

Consider Certified Refurbished—Networkworld US notes that “some vendors offer official refurbished equipment programs, including Cisco and HPE Aruba. They fully refurbish, recertify, and support the hardware.” While Networkworld says the lead time here is days or weeks, other sources say it can be a lot longer. mac-tech can help you assess and source this and other options.

Use What You Have—Gartner Research notes that most enterprise switches operate below 75% port capacity. Companies tend to over-provision to support future growth, but for now, putting that excess capacity to use is probably the smarter move.

Switch Vendors—Not all vendors are impacted equally or at the same time, so it makes some sense to shop around, but keep in mind the severity of the chip shortage and don’t be too Quixotic about it.

Increase Spend—We think there are smarter ways to get through a crisis, but there’s a reason this one’s the oldest play in the book. It does tend to work.

Modify the Network—A favorite here at mac-tech. We like to solve problems in creative ways, and we find that there are many ways to build a network. We can help you arrive at an innovative approach, using readily available equipment.

The Endgame

The strategies and vulnerabilities discussed here do not represent a complete list. Every business has its individual footprint, and we thrive on understanding both your technical needs and the employees who make your business possible. Our endgame is always to find the best solution for you—no one else.

^[1] What Are My Options for Dealing with Long Lead Times on Network Equipment?

^[2]What Are My Options for Dealing with Long Lead Times on Network Equipment?