How the Global Chip Shortage is Affecting Screen Prices

If you’ve been following the news lately, you’ve likely heard of the global chip shortage that is affecting the automotive, PC, and video game industries. Unfortunately, the widespread use of microchips means that this shortage is inevitably spreading to other industries, and now that includes cell phone repair. Currently, we’re seeing higher costs for aftermarket screens, particularly those for iPhone 7 through iPhone XR. We are hoping that these increases will remain restricted to those models, however, it’s possible that more will be included if the supply issues are not resolved.
What is causing this shortage?

There are actually several different factors causing these supply constraints. As one analyst puts it, this is a perfect storm of supply and demand caused by everything from work-from-home trends, trade wars, industry fears resulting from COVID, and even bad weather. But for our industry specifically, it’s caused by competition for low-priority IC chips, and the inability of manufacturers to increase production.

Since the shortage affects the semiconductor industry as a whole, there is tremendous demand across the wide range of chip products that manufacturers produce. However, demand and profit are not spread evenly, so manufacturers are prioritizing higher-profit and higher-importance chips (such as complex microprocessors and chips ordered by high-profile clients). This results in two problems for our industry. First, new production investments are not being spent on simple chips like ICs, which means that any new demand (such as sudden growth in the auto industry) is limited to the existing supply and production capability. Second, those existing resources are going first to high-priority clients such as Apple and Samsung, and then to whichever clients are willing to bid the highest. The end result is a scarcity of IC chips that is raising the price of aftermarket screens.