Cloud-Based Communication

How the Microchip Shortage Impacts Premise-Based Phone Systems

We have all heard about the microchip shortage over the past six months, but now we are starting to see the effects. From a consumer standpoint, the understanding of this semiconductor shortage was that it would impact things like televisions, smartphones, and other small personal devices. However, this shortage has created manufacturing disruptions across over 169 different industries. In this modern age of technology, everything from construction vehicles and cars to gaming consoles require semiconductors to function. According to Acer, one of the largest laptop makers in the world, this shortage will last until second quarter of 2022.

This shortage has impacted the communications industry in a huge way. We are seeing increasingly longer wait times for premise-based phone system hardware. This impacts not only service providers, but end users as businesses begin the process of going back to the office. Since communication is one of the most important components of any business, this shortage is forcing businesses to look at alternative platforms. Luckily, cloud-based phone systems are available and many cases, a better option that premise-based phone systems.3311

What caused this microchip shortage?

The COVID-19 pandemic is to blame for the initial shortage of microchips, but there are other factors that have played into it. The manufacturing plants were forced to shut down across the world when the virus struck, pausing production for a highly sought-after product. However, there are many other factors that are playing into the shortage including higher demand for microchips in products that previously did not require them. Supply has also been slowed down by more restrictions at ports and international borders.

When the pandemic hit, the demand for laptops, printers, and mobile devices skyrocketed as people scrambled to work remotely and attend school from home. Toilet paper was not the only item that was “panic purchased,” the technology field was also hit with insatiable demand. Gaming consoles, tablets, televisions, and other home entertainment devices saw huge spikes in demand as people were forced to spend time in their homes. Car dealerships have also seen a huge manufacturing disruption, leading to a massive shortage of cars available for purchase, while demand for new and used vehicles is at a record high.

How will this impact my business’s communication system?

To put it simply, if you are looking into premise-based phone systems or are waiting for the installation of one, you will have to wait until it is available. Physical phone systems require semiconductors to function, which are in short supply. If you are unable to wait, you will want to investigate a cloud-based communication platform that does not require as much physical hardware.

What is the difference between a premise-based phone system and a cloud-based phone system?

A premise-based phone system is physically installed into your building. It consists of wires connecting each physical phone to the data center. This type of phone system requires physical desk phones for use. A cloud-based phone system (also known as cloud PBX, hosted PBX, or hosted phone system) is delivered fully over the internet and managed off-site. This cuts down on upfront investment and communications infrastructure. Choosing between these two phone systems can be tricky, but it comes down to your specific business needs. There are pros and cons associated with both options

Cloud-based phone systems


  • Internet connected phone systems allow freedom for remote work. You can answer calls while moving around your office, or working off-site entirely
  • Calls can be answered on your laptop or mobile device
  • Lower upfront investment and less infrastructure required
  • Less maintenance is required
  • Managed off-site by a third party meaning you will not need to staff a team to manage your phone system
  • Easily scalable as a business grows


  • Higher internet speeds and bandwidth is required
  • Network settings may need to be altered, such as router optimization and placement
  • Users may need additional training and guidance

Premise-based phone systems


  • Full control over your phone system operation and use
  • Zero latency when transferring calls
  • Lower cost over several years
  • Lower cost on feature sets such as Music on Hold or Message on Hold


  • Higher cost upfront for installation
  • Infrastructure required
  • No flexibility with remote work
  • Maintenance is done by the business, not managed by a third party
  • Additional infrastructure may be needed as a business grows

As you can see, both types of phone system have benefits depending on a business’s needs. As we navigate this semiconductor shortage, a cloud-based phone system is a great way to stay connected and reduce any disruptions to business communications.

If you have any questions about cloud or premise-based phone systems reach out to us at or call 763-475-5500. We are here to help you plan, prepare, and deploy a new solution.

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