Microchip shortage: Why some used computer parts, game consoles are selling for hundreds

OTTAWA (CityNews) ─ A global shortage of a key computer component is impacting various industries from auto manufacturing to video gaming and telecommunications − and has some Canadians lining up overnight to get their hands on the goods.

Prices for semiconductors have skyrocketed due to the shortage caused in part by the COVID-19 pandemic.

It’s a supply chain problem that means car dealerships can’t get new cars for their lots, and new graphics cards and video game consoles are reselling for more than twice their retail price online.

In some cases, prices for components quintupled in the past two years.

“I think this really is unprecedented,” said Sarah Prevette, chair of Canada’s Semiconductor Council. “It’s a perfect confluence of factors in terms of rising demand.”

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The pandemic kicked the shortage into high gear with huge demand for consumer electronics.

But factors underneath it were in place for years. Most semiconductors are made by a small number of companies, most of which are manufactured in Asia, and most of which were already running factories 24 hours a day before COVID-19 hit.

“When companies that are making those devices really need those chips for their products − and that ranges from automakers all the way to mobile phones − they have to place those orders well in advance,” said Prevette. “The order could be six months in terms of lead time from when the order is placed to when the chip is received.”

For ordinary Canadians, that means either paying a scalper’s price for sought-after computer components or camping out overnight when they become available at retail stores.

Canadians line up outside Best Buy on Wednesday, Oct. 6 to purchase computer graphics cards. (Credit: CITYNEWS/Xiaoli Li)

Canadians lined up − and camped out − at an Ottawa-region Best Buy as of 8:30 p.m. Tuesday when the store announced it would be getting a limited supply of 30 Series Nvidia graphics cards.

“The cost difference getting them from here? It’s just worth it to wait overnight rather than buy them online. You could save $1,500 to $3,000,” one person in line told CityNews.

“I’m here for my little cousin. He needs it for gaming. He’s trying to build his own PC. So closest Best Buy that has it, so I came out for him today.”

While some planned to use the cards in their own computers, others said they aimed to sell them immediately for a quick profit.

“Usually I buy my cards off scalpers so I can do mining. But now I’m like, I’ll try see what the experience of you know, the scalper life,” said another man in line.

WATCH: Global semiconductor chip shortage (Jan. 26, 2021)

Recent reports say the shortage could continue into 2023. But Canadian industry isn’t waiting.

“We do not have domestic manufacturing of chips here in Canada,” said Prevette. “So we need to think about where we can play. Because this is a $7 trillion global market.”

Canada’s Semiconductor Council is a group of businesses and industry leaders hoping to make Canada a player in the chip market.

There’s a lot working against Canada: Asian manufacturers have decades of experience and government investment. But Canada has one key advantage, said Prevette.

“If we can hone skills and talent or maybe research and development here in Canada − things we’re world-renowned for, our amazing academic institutions − that’s going to give us the competitive advantage at the beginning of the supply chain, then to be able to negotiate and have leverage to have the supply that might be manufactured overseas.”

—With files from Xiaoli Li