Sony’s (SNE) PlayStation 5 and Microsoft (MSFT) Xbox Series X are two of the most powerful game consoles ever built. They are also nearly impossible to get hold of.
If you’re a gamer or have already tried buying a console for a gamer in your life, you know that when they go on sale, the PS5 and Series X will sell out in seconds. Whether it’s scalpers using automated bots to grab available consoles online or retailers with minimal inventory, the consoles seem just as elusive as Big Foot.
The problem? The same problem is squeezing every other industry on Earth that relies on semiconductors: a global chip shortage caused by a massive surge in chip demand as consumers seek everything from computers to TVs for work and entertainment during the pandemic.
But there is good news for gamers, and some bad news. The good news is that chip and console makers are working to bring more systems to the public as soon as possible. The bad news? They will likely still be just as hard to find until at least the second half of the year.
Fast sales and high demand
Sales of the latest generation of consoles have been strong for Sony and Microsoft since they launched their systems in November. Sony sold 4.5 million PS5s in Q3 2020, the console’s first quarter of availability. For its part, Microsoft, with no breakout in unit sales of Xbox hardware, saw its game revenues increase by 40% in the fiscal second quarter of 2021.
“It’s always a challenge to ramp up supply enough to meet that initial demand for a next generation of consoles,” Jon Erensen, senior director in the Gartner Technology and Service Provider research group, told Yahoo Finance.
“This time with the launch of Sony and Microsoft at the same time … it was even more challenging because of some of these issues we’ve seen around the pandemic and chip supply,” he added.
Both Microsoft and Sony say they are releasing as many consoles as possible, with Jim Ryan, CEO of Sony Interactive Entertainment, saying in November that the company’s entire stock was sold out.
“Everything has been sold. Everything is sold, ”Ryan told Russian publication Tass. “I have spent much of the past year trying to ensure that we can generate sufficient demand for the product. And now … I spend a lot more time increasing the supply to meet that demand. “
A Microsoft spokesperson, meanwhile, told Yahoo Finance that the technology giant is working with its retail partners to replenish its systems stock as soon as possible.
So when can you expect console supplies to become available to more customers? According to AMD CEO Lisa Su, there should be more production options for its chips in the second half of the year. For gamers, this means they may have to wait until Q3 2021 to get their hands on the latest consoles.
Chip manufacturers can’t keep up
Any major industry you can think of relies on semiconductors. Our world runs on chips – be it the medical industry, the PC industry or the automotive industry.
But the coronavirus pandemic threw a curveball on the global economy. While people around the world stayed at home to slow the spread of the virus, they started buying up consumer electronics. According to IDC, PC sales are up 13.1% in 2020, the highest in a decade.
“It’s fair to say aggregate demand exceeded our schedule,” Su said during AMD’s Q4 2020 earnings call. “And as a result, we had some supply constraints at the end of the year. Those were mainly, I would say, in the PC market, the lower end of the PC market, and in the gaming markets. Both Microsoft and Sony use modified AMD chips in their latest consoles.
“The industry needs to increase overall capacity levels,” added Su. “And so we see some shortages during the first half of the year, but there is extra capacity in the second half.”
According to Erensen, the dramatic increase in demand for consumer electronics has hit chip manufacturers, who have limited capacity in their factories to meet the needs of their customers.
“They are all fighting for the assignments they need,” said Erensen. But there isn’t enough to go around. So you see a shortage, not only in game consoles, but you also see shortages that affect all kinds of different markets. “
It’s an unfortunate disappointment. But hopefully supplies will open faster so that more gamers can play the hottest games to pass the time during the final days of the pandemic.
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