Chip Shortage Delays Routers for Broadband ISPs and Networks

The ongoing global shortage of semiconductor chips, which has so far hit everything from electric cars to graphics cards, is reportedly also causing huge delays in the market for broadband ISP and network routers. The situation could make it harder for providers to add new customers, replace faulty kit or launch new products.

The situation began last year following the first COVID-19 lockdown, which slowed production. Since then, the problem has also been exasperated by further lockdowns, as well as a semiconductor plant fire in Japan, disruption to trade caused by last week’s blocking of the Suez Canal in Egypt, prioritisation being given to Smartphone makers and the sudden rise in demand that followed the easing of earlier lockdowns.

The head of European regional business for Zyxel Communications Corp – a Taiwan-based router-maker that is also used by some UK providers and consumers, Karsten Gewecke, is quoted by Bloomberg as saying they have “been very close several times” to running out, and he warned that “it could still happen.”

At the start of this year Zyxel began asking customers to place orders for new routers a full year in advance to help mitigate the long supply times. As if that wasn’t bad enough, a number of the major semiconductor firms and analysts have warned that the situation may not return to normal until toward the end of 2021, or possibly even into 2022.

Karsten Gewecke said:

“It’s a snowball effect that we’re pushing in front of us, and the situation since then has just become worse and worse and worse. When I talk to some of the chipset vendors, some of them tell me that they have something like overbooking of 300% of their capacity.”

One other catch with all this is that demand outstripping supply tends to result in higher product prices, which is something that has already been seen with computer graphics cards (some new models have doubled or even tripled in price).

We had been expecting one or two major UK ISPs to potentially launch new routers and TV set-top-boxes this year, but given this news it’s possible that the ongoing supply problems may impact those plans. However, so far we haven’t heard much concern from broadband ISPs with respect to consumer facing devices, but this may be partly because they’re still eating through existing stock.