Shutdowns in China extends computer chip shortage – Danish companies worried

Small microchips form the cornerstone of much of the electronics we use daily. But in recent years, microchips have been in short supply, and it has created long waiting times and overpricing on several products.

Many companies had hoped that 2022 would be the year when the crisis finally ended. But now the problem seems to continue and new shutdowns in China, which produces a large part of the microchips, are affecting the rest of the world including the Nordic Region, DR writes.

Deputy director of Danish Industry, Peter Thagesen, who is responsible for global trade, says to DR, “We had hoped that the problem would have subsided. Unfortunately, all the signals we receive show that the problem actually seems to be growing and getting bigger.”

He reckons the problem will continue throughout 2022.

“It means that companies can not produce everything that is in demand. Thus, we in Denmark miss out on a lot of earnings,” Peter Thagesen says.

At the Danish startup company SoilSense, they are worried about the situation. The company produces a sensor system for farmers, and it has developed into an export success in Sweden, Hungary, and Kenya, among other places. The system helps farmers understand how much groundwater is available to their crops. That way, farmers can see if they need to turn up or down their irrigation. 

A specific type of microchip is essential for the production of the sensor system.

“And it is completely hopeless to get hold of at the moment. It currently has a delivery time of over a year, and the price is close to tripling,” Sebastian Jensen, co-founder of SoilSense says.

Last year, SoilSense purchased a large portion of the necessary components. According to Sebastian Jensen, they, therefore, have what they need this year. But in the long run, the crisis could have major consequences for the startup business.

“There is a very high risk that in 2023 we will not sell anything due to the very high delivery time,” Sebastian Jensen says and continues:

“I fear that worst case, we have nothing to sell and thus can not deliver to our customers. As a result, our business will not be able to survive.”

SoilSense is far from the only Danish company affected by the situation. In a survey from September last year among Dansk Industri’s members, 75 percent of the companies that use chip, answered that they need the item.

About Gregers Møller

Editor-in-Chief • ScandAsia Publishing Co., Ltd. • Bangkok, Thailand

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