Global Chip Drought Is Affecting Australia’s NBN

That tiny but mighty piece of technology – the silicon computer chip – is wreaking havoc on the world as its supply continues to be halted. The global shortage is causing delays to the production of all kinds of products and services including cars, TVs, video game consoles – and even the rollout of Australia’s National Broadband Network (NBN).

The coronavirus pandemic is to blame for the temporary shutdown of the production of silicon computer chips, compounded by severe storms in Texas causing more recent delays. This has resulted in worldwide chip shortages, with a knock-on effect to the production of phones, computers and automobiles.

Samsung, the world’s largest manufacturer of computer chips in the world, and one of the biggest users, notes the chip shortage came during a time of rising demand for consumer electronics – the early days of the pandemic.

“There’s a serious imbalance in supply and demand of chips in the IT sector globally,” said Koh Dong-jin, co-chief executive at Samsung.

Apple, the world’s biggest buyer of chips, was one of the worst affected companies. While the world expected its iPhone 12 to be released like clockwork in 2020, the launch was delayed because of the chip drought.

As if things weren’t tough enough, a storm in February hit Texas and caused power outages, forcing several chip factories to temporarily cease production.

Manufacturers are slowly increasing capacity to meet demand but there are still growing shortages in products that need semiconductors to function.

Australian Information Industry Association’s (AIIA) general manager of policy and advocacy, Simon Bush, said: “Covid-19 has had two major impacts on the availability of computers through the initial closure of factories and then the global surge, including in Australia, for new computers and IT equipment.”

AIIA estimates delays in large IT orders for business and government of at least six to eight weeks.

The demand for chips is now starting to have a flow-on impact on a range of industries.

The government-owned company rolling out Australia’s $57 billion National Broadband Network (NBN) had to stop connecting new customers in February because it was running out of modems, with no way to restock them any time soon.

This week, the company announced it would resume orders for new connections from 24 May – nearly four months after having to put them on hold. In the meantime, NBN Co connected customers that were medically vulnerable, rationing supply for those people as priority.

In March, modem stock was able to be replenished, but first the company has a backlog of 31,000 orders to tackle before it can open itself to new ones.

“We are confident that we will receive regular deliveries of new HFC modems in the weeks and months ahead to enable the resumption of new HFC connections from 24 May 2021,” said NBN’s chief customer officer, Brad Whitcomb.