INVEST IN US
Start Here

Chip Shortage's Impact on Small Businesses

April 9, 2022

I’ve been doing product development every week of my life since 1988.  I’ve seen shortage before, but nothing on this scale or duration.  I’m looking forward to it ending, and we will always remember the global chip shortage of 2020, 2021 and 2022.  (Please end in 2022. Please.)

The global chip shortage has been hard on your favorite electronics brands. 

Apple, Ford, SONY and more have struggled to secure the chips they need to build existing products and launch new ones.  I knew it was bad when I ordered an Apple iPad for my dad December 4, 2021 and it arrived late Feb 2022.  The chip shortage is painfully real for companies of all sizes.

So what do big (and smart) companies do when faced with debilitating part shortages? 

Leverage their buying power and buy WAY more chips than they need, leave them on the shelf, and pull from their reserves as they need them.  Brilliant! 

What does that do to the mid-sized companies out there?  It puts them in a bind and they go to distributors and resellers and “overpay” for chips so they can keep their business running and hoard chips just like the big guys. Very clever.  Sure they ship late, but eventually they ship. 

What do the smaller, established companies do when they get calls from distributors and factories canceling their orders, refunding their prepayment and then those same “partners” start selling the chips for double to the mid-sized companies? The small companies call in favors, scramble, hustle and stop shipping products because they can’t get the parts they need.  In some cases they rack up big-time debt, continuing to pay employees in hope that the shortage will end soon, or hoping someday soon they too can get chips they overpay and hoard them.

Now, what do you think a startup does?  What to do when you have no prior history, you’re at the bottom of everyone’s list ‘cuz you’re the new guy, you can’t really afford to overpay by too much and you can’t get anyone to return your emails and calls?  Oh, and maybe you’ve got a new cool product that is in demand?  

The problem is not of your making.  You’ve got no short-term options.  What do you do? 

Here’s what you do…

Don’t throw blame or shade. Stay active even if there is "nothing you can do this week." You notify customers of the dely.  You stop advertising. You hang in there. You think about it every single day, trying to think of solutions.  Every. Single. Day.  You’re honest with customers about your situation.  You don’t get mad at the factory.  You recognize that while this is out of your control, you CAN work the problem every single day.  And when the trolls come at you realize they are frustrated, just like you. Don’t take it personally. 

And guess what happens?  Your customers are supportive. 99 out of 100 of them encourage you to “keep going!” and send supportive emails and online posts.   Your factory appreciates you and works harder to find solutions.  Your team digs in and tries new chips, new designs and never stops working to solve your problems. 

Don’t stop working the problem.  Don’t stop involving customers.  That’s what you do. 

I’ve been doing product development every week of my life since 1988.  I’ve seen shortage before, but nothing on this scale or duration.  I’m looking forward to it ending, and we will always remember the global chip shortage of 2020, 2021 and 2022.  (Please end in 2022. Please.)

Steve Skillings

BusyBox CEO

We search the world for the chips we need ... this one used to be $6, now it's $150+ if you can get it, but this is what it's like in April of 2022.
Back to Blog