The semiconductor industry, that invisible backbone of modern life, is in the grip of a crisis that threatens to push consumer electronics prices into absurd territory. Your next smartphone, I wager, could set you back a cool two grand. This is not hyperbole. This is the arithmetic of scarcity meeting the geometry of demand.

Let us start with the microchips themselves. The global supply chain for semiconductors is a delicate, just-in-time contraption that was already groaning under the weight of pandemic-era demand for laptops, servers, and gaming consoles. Then came the geopolitics. The US-China trade war, followed by sanctions on Huawei and others, prompted Chinese firms to hoard chips. That hoarding created phantom demand, which led to double ordering, which now leaves the entire system with a hangover of epic proportions.

Consider the numbers. The average smartphone contains over a hundred chips, from the main processor to the power management IC to the Wi-Fi module. Each of these components relies on a different fabrication process, often from different foundries. And those foundries are running at full capacity. TSMC, Samsung, Intel, they cannot build factories fast enough. A new fab costs billions and takes years to come online. The result is that lead times for some chips have stretched to 50 weeks. That means if you order a chip today, you might get it in time for Christmas 2022.

This is not just a problem for Apple and Samsung. It hits every manufacturer of anything with a plug. Car companies have been forced to halt production because they cannot get a $1 chip that controls the window lift. The economic damage is already in the hundreds of billions. But for the consumer, the pain will be felt most acutely in the mobile phone market.

Why? Because smartphones are the ultimate discretionary purchase. When supply is tight, manufacturers will naturally allocate chips to high-margin products like servers and luxury cars. The consumer handset, with its razor-thin margins, gets pushed to the back of the queue. And when supply finally trickles through, the cost will be passed on. Expect price hikes of 20% to 50% on the next generation of flagships. The iPhone 13, if it ever arrives, will be a premium product in every sense.

But is there a silver lining? Perhaps. The shortage has finally jolted policymakers from their slumber. The US has pledged $50bn to boost domestic chip production. The EU is following suit. But this is a long-term fix. In the meantime, we are left with a classic market response: price rationing. The market, in its wisdom, will clear. But the price of clearing will be born by the consumer.

Let me be clear: this is not a temporary blip. This is a structural shift. The era of ever-cheaper electronics is over. We have become accustomed to disposable smartphones that cost less than a weekend away. That is about to change. The next device you buy will be more expensive, and it will last longer because you will be forced to hold onto it.

For the budget-conscious, the advice is simple: buy now, or wait for a bust that may never come. The chip shortage is a reminder that the global economy is a fragile web. When one strand snaps, the whole thing trembles. And right now, the entire semiconductor supply chain is trembling. Your next smartphone will cost $2,000 because the chips that make it possible are worth every penny.

Inflation, dear reader, is not just about money printing. It is about bottlenecks. And this bottleneck is a whopper. The Bank of England can print all the pounds it wants, but it cannot print a 5-nanometre processor. That is the hard truth. The market will adjust, but it will be a painful adjustment. Prepare your wallets.