Sony’s PlayStation 5 (SNE) and Microsoft’s Xbox Series X (MSFT) are two of the most powerful game consoles ever built. They are also almost impossible to obtain.
If you are a gamer, or are trying to buy a gamer console in your life, you know that whenever they go on sale, the PS5 and X Series will sell out in seconds. Whether they are money changers using automated bots to pick up any console available online or retailers with minimal inventory, consoles are apparently just as elusive as Big Foot.
The problem? The same problem affecting all other industries on Earth that depend on semiconductors: a global chip shortage caused by a massive increase in demand for chips as consumers look for everything from computers to TVs for work and entertainment during the pandemic.
But there is good news for the players and some bad news. The good news is that chip and console manufacturers are working to bring more systems to the public as quickly as possible. The bad news? They will probably still be so hard to find until at least the second half of the year.
Fast sales and high demand
Sales of high-end consoles have been strong for Sony and Microsoft since they launched their systems in November. Sony sold 4.5 million PS5s in the third quarter of 2020, the first quarter of console availability. In turn, Microsoft, which does not disclose unit sales of Xbox hardware, saw its gaming revenue grow 40% in the second fiscal quarter of 2021.
“It is always a challenge to increase the supply enough to meet the initial demand for a next generation of consoles,” Jon Erensen, senior director of the research group Gartner Technology and Service Provider, told Yahoo Finance.
“This time, with Sony and Microsoft launching at the same time … it was even more challenging because of some of these problems that we saw around the pandemic and the chip supply,” he added.
Both Microsoft and Sony say they are launching as many consoles as possible, with Sony Interactive Entertainment CEO Jim Ryan saying in November that all of the company’s shares were sold.
“Everything is sold. Absolutely everything is sold, ”Ryan told Russian publication Tass. “I spent much of last year trying to make sure that we can generate enough demand for the product. And now … I’m spending a lot more time trying to increase the supply to meet that demand. “
A spokesman for Microsoft, meanwhile, told Yahoo Finance that the technology giant is working with its retail partners to replenish its systems’ inventories as quickly as possible.
So, when can you expect console supplies to start being made available to more customers? According to AMD CEO Lisa Su, there should be more production capacity for its chips in the second half of the year. For players, this means they may have to wait until the third quarter of 2021 to get their hands on the latest consoles.
Chip makers can’t keep up
Every major industry you can imagine depends on semiconductors. Our world works with chips – be it the medical industry, the PC industry or the automotive industry.
But the coronavirus pandemic threw a curved ball into the global economy. While people around the world stayed at home to stop the spread of the virus, they started buying consumer electronics. According to IDC, PC sales grew 13.1% in 2020, the highest in a decade.
“It is fair to say that overall demand has exceeded our planning,” Su said during AMD’s fourth quarter 2020 earnings conference call. “And as a result, we had some supply restrictions at the end of the year. These were mainly, I would say, in the PC market, the bottom segment of the PC market and in the gaming markets. ”Both Microsoft and Sony use custom AMD chips on their latest consoles.
“The industry needs to raise overall capacity levels,” added Su. “And, therefore, we see some tightening in the first half of the year, but there is additional capacity in the second half.”
According to Erensen, the dramatic increase in demand for consumer electronics has hit chip makers, who have limited capacity in their factories to meet their customers’ needs.
“Everyone is fighting for the allocations they need,” said Erensen. “But there is not enough for everyone. So, you’re seeing a shortage, not really just on game consoles, but you’re seeing that the shortage affects all kinds of different markets. “
It is an unfortunate disappointment. But I hope supplies will open faster, so that more players can play the hottest games to help pass the time during the pandemic’s end days.
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