Chip Shortage Puts Washing Machines on the Chopping Board – But at What Cost?

The global chip shortage is forcing desperate manufacturers to turn to an unusual source of semiconductors – washing machines.

Today’s washing machines contain a number of chips that enable touchscreen displays, wi-fi connection, load weight sensors and fault detectors to operate.

Peter Wennink, CEO of Dutch multinational ASML, which manufactures photolithography systems used to produce computer chips, told investors late last month that a major company had informed him it had resorted to buying washing machines and tearing out the chips inside them. He did not name the firm, but it is thought to be linked to the automotive industry.

Stuart Miles, founder of technology website Pocket-lint, told The Daily Mail: “It is good old scavenger tactics. In this case, a company needs a part that is vital for its finished product, say a car, and they have to get creative getting it.”

Due to the chip shortage, Sony now believes it will only be able to sell 11.5 million consoles this year, down from a previous estimate of 14.8 million. Intel has stated that it’s planning for semiconductors to be in short supply through 2023. 

TSMC, the world’s largest contract chip maker, reiterated a couple of weeks ago that its capacity remains tight throughout 2022. A major Chinese chip maker has sold out its capacity through 2023, according to Mr Wennink.

Hardest hit currently are car makers. Cars use 15% of all chips made, with each vehicle needing around 3,000. The lack of semiconductors means manufacturers can be left with vehicles worth $100,000 or more stuck in factories for months because they cannot get hold of basic chips that two years ago cost just $2.

To avoid having their cars sat unsold in warehouses, car manufacturers are believed to be buying up new washing machines and stripping them of their chips.

Tesla said last week that production remains hampered by shortages and elevated prices for key components, while Volkswagen has cautioned to expect continued negative effects from chip scarcity. Last week, Toyota Motor trimmed its output target by about 100,000 units for this year on insufficient semiconductor supply.

Production halts and component shortages as a result of the Russia-Ukraine war could intensify supply-chain challenges and delay a recovery of auto sales in 2022, according to Bloomberg, which added that March passenger-car sales from Europe’s five largest markets are 40% below pre-pandemic 2019 levels.

While the idea that big businesses are buying washing machines and ripping them apart for their chips seems more Edward Scissorhands than Elon Musk, it illustrates what is a very real problem. The wait times for semiconductor deliveries rose again in March, reaching a new high of 26.6 weeks, according to research by Susquehanna Financial Group.

Microchips are at the core of all the essential machinery of our lives, from cars and computers to data centers and dishwashers, to fridges and phones. The shortage is impacting many industries globally and that will hit consumers sooner rather than later as the cost of goods rises and their availability declines.

And it is not easy to just ramp up production. They may be small but chip fabrication is an elaborate process involving more than 3,000 steps.

Businesses across the board rely on chips to continue functioning well, be that with regards to what they manufacture or, as is equally vital, through their own IT and computer systems. The chip shortage has left many scrambling for alternative solutions.

With component scarcity predicted to last for months yet, and demand for IT solutions increasing, today’s businesses have been turning to a different approach – refurbished technology, a core element of the Techbuyer business alongside our new equipment offerings.

Refurbished IT equipment performs identically to new when refurbished to a high quality and configured correctly. In fact, upgraded machines can even outperform basic configurations of new machines. Techbuyer stocks Intel and AMD server processors and processor server kits for a variety of server models including HP, Dell, IBM and Lenovo, with our quality refurbished Techbuyer Certified processors offering you significant savings compared to the RRP. All our stock is stored within our warehouses, so getting what you need couldn’t be easier.

Choosing that route is even more sensible now, given that the global chip shortage is unlikely to ease any time soon. “The demand we are currently seeing comes from so many places in the industry,” Mr Wennink said, pointing to the wider adoption of Internet of Things applications.

“It’s so widespread. We have significantly underestimated the width of the demand,” he said. “That, I don’t think, is going to go away.”

Meanwhile, the question of what to do with the carcasses of eviscerated washing machines has not yet been addressed, as Mr Miles points out: “You can imagine the beleaguered procurement team whose struggles to get a sensor are holding up products worth tens of thousands. They probably had a Eureka moment [using] the washing machine, tapping away at its TV-style display to pick which cycle to use.

“They rushed breathlessly into the next board meeting and proclaimed, ‘I have solved it. We are going to buy 10,000 washing machines and we can take the sensors out of them.

“’What are we going to do with the leftover appliances? Let’s just worry about that tomorrow.’”

The truth is that it’s a worry right now. Electronic waste, or e-waste is a huge problem and it is only accelerating. Last year more than 57 million tons of it was dumped in landfill and from 2014 to 2019, global e-waste grew by 21%. It is expected to increase to 74.7 million tons by 2030 and the volume of e-waste has doubled in just 16 years. 

Making the technology sector sustainable is our priority today - we cannot “just worry about it tomorrow”.

That is why we at Techbuyer are determined to help to drive sustainable growth and the circular economy in the technology sector. With raw materials running out and e-waste on the rise, we’re committed to finding innovative ways to close the circle, reuse equipment and materials, rebuild from component parts and recycle only when we have to. We’re all about finding the right long-term sustainable solutions for our customers by listening to what they really need.

We supply cost-effective, high quality servers, storage, memory and networking equipment from more than 150 brands including HPE, Dell, IBM and Cisco.

We have more than 225,000 parts in stock across three continents with same-day delivery available in most parts of the US. In addition, our refurbished hardware comes with a three-year warranty on all online orders.

So, if you or your business is experiencing any difficulties getting hold of the technology you need, then contact Techbuyer to discuss the options we offer.