Page 30 - Banking Finance December 2022

ARTICLE

GLOBAL CHIP

SHORTAGE AND

ITS RIPPLING

EFFECT ON

BANKS

he 2020-21 global chip shortage is a crisis in which Root Cause of Shortage
the demand for integrated circuits is greater than
The semiconductor market's issues began with an abrupt
the supply, affecting more than 169 industries and
surge in demand last year for devices to keep us entertained
T has led to major shortages. Global shortage of
and working remotely during the pandemic, but the
these tiny, essential microelectronics that make so many
pandemic forced chipmakers to shut operations last year.
things smart and connected like cars, homes, electronic
By the time they reopened, they had a backlog to fill. Thus
devices, and home equipment.
created a wide demand supply gap. Thus various industries
have been hit by major shortages such as PCs, laptops,
Thisglobal shortage of chips is now threatening to imperil
mobiles, tablets, gaming consoles, but especially
the supply of another pretty indispensable item: the
automobiles. Equipment manufacturers had to delay their
payment card that we use every day to make certain cashless
production lines as there was not an adequate supply of
transactions. These cashless transactions gained more
chips. The impact on many industries are covered widely on
popularity in Asian countries during COVID-19, due to
various platforms but in coming days the world will see major
contact less payment requirements.
effect on Banking Industry as well.
Impact on Banking Industry
About the author Every time a bank account opens, a payment card has

to be issued; they also have to be renewed regularly
Eesha Vashishtha
after their expiration date and replaced in an
Senior Manager-E-Learning
Union Bank of India emergency if they get lost or compromised. Chip-based
Staff College Bengaluru payment cards are designed to prevent fraudulent

30 | 2023 | JANUARY | BANKING FINANCE