Analysts told when the chip shortage ends

Anyone who follows the news even a little knows that the semiconductor industry is going through hard times right now. The crisis caused by the coronavirus pandemic has led to a global chip shortage, which has become the biggest problem for the global market in recent years. The shortage of semiconductors has affected everyone without exception — from the automotive industry to the mobile industry and the home appliance market. Analysts agree that this will be a protracted crisis and no way out of it is expected in the near future.

Analysts polled by BusinessInsider said the chip shortage could persist until 2023. At the moment, the supply of semiconductor products is still limited, and their cost is growing rapidly — this is how chip makers are trying to compensate for the costs of expanding production capacities. But all these measures of producers are insufficient to completely avoid the impact of the crisis, which affects everyone and will continue to affect everyone. With the deficit, companies did not have the funds to cope with it. Yes, in the short term, they can slightly increase production volumes, but expanding production capacity to fully meet the increased demand for chips will require a long-term investment and will take many months and even years. Because of this, analysts expect the chip shortage to continue for the next couple of years, but unlike the current situation, the shortage will emerge in waves.

Analysts point out that there are three main reasons for the chip shortage. Firstly, it is the increased demand from customers. Secondly, the production cycle of products. And thirdly, the priority of customers. In other words, in the context of the coronavirus pandemic, consumer demand for electronics has grown sharply and companies had to increase the production of their equipment in order to satisfy it, and therefore the demand for microcircuits has grown. Industry volatility has also increased the production cycle of some products, such as the next generation iPhone. And chip makers have to determine which customer to prioritize so that they can get the chips first in the face of tough shortages. Obviously, big brands such as Apple and Samsung have been prioritized. All of this together has exacerbated the problem of shortage of microcircuits.

Even after the acute shortage of microcircuits passes, the industry will still boom, analysts said. The demand for electronics in the long term will remain very high and the current situation with the coronavirus only exacerbates it.

Not so long ago it became known that the waiting time for chips reached 18 weeks, while back in April this period was less than 17 weeks. It is becoming increasingly difficult for chip manufacturers to meet the growing demand for chips. And this is what caused the rise in the price of semiconductors. So, the other day the Taiwanese chipmaker TSMC announced a 20% price increase for all its products. Other market participants, including Samsung, are ready to follow her example. It is expected that in the near future the chips will rise in price by an average of 10-20%, which will inevitably lead to an increase in retail prices for equipment.