The global shortage of computer chips is not getting better. Delays are lengthening, and companies depending on chip supplies are scrambling. This will surely change the competitive dynamics in the semiconductor industry a few years out. Just in time inventory methods will be moderated, and governments are going to act to prevent situations like this in the future. In macro terms, this likely keeps the heat up on goods inflation which may start to push inflation expectations higher unless the Fed begins to use more hawkish rhetoric. The Wall Street Journal reports:
Almost a year into a global chip shortage, the problems are increasing for many customers as delays get even longer and sales are lost.
Manuel Schoenfeld placed an order in May for transmission chips for the utility-monitoring devices made by his New York-based company PowerX. He was told the chips would arrive by summer, then fall, then winter and now doesn’t expect to get them until May 2022.
“This is far from over,” Mr. Schoenfeld said.
The global semiconductor shortage is worsening, with wait times lengthening, buyers hoarding products and the potential end looking less likely to materialize by next year. Demand didn’t moderate as expected. Supply routes got clogged. Unpredictable production hiccups slammed factories already running at full capacity.
What’s left is widespread confusion for manufacturers and buyers alike. Some buyers trying to place new orders are getting delivery dates in 2024, said Ian Walker, operations director at electronic-components distributor Princeps Electronics Ltd., which helps companies find chips.
“It really feels as if we are running out,” Mr. Walker said.
The $464 billion semiconductor industry has been unable to keep pace, leading to lost revenue across the board. The pain is spreading beyond the initially affected—like car makers and home appliance manufacturers—to makers of other products, including medical equipment and smoking devices. The smartphone industry will grow by just 6% year-over-year, or half the initial forecast from earlier this year, because of chip woes, according to Counterpoint Research, which tracks handset shipments.
Apple Inc. warned Thursday that supply-chain disruptions are hindering iPhone and other product manufacturing ahead of the holiday-shopping quarter, even as the company reported a record 12-month profit.
Chip makers say the lack of supplies has caused them to lose sales. “Trust me, we would be shipping a lot more if we weren’t constrained by the supply chain of these other components in the industry,” Intel Corp. Chief Executive Pat Gelsinger said last week on an earnings call. Mr. Gelsinger has said he expects shortages to last until 2023.
Wait times for chip deliveries have continued to climb above a healthy threshold of 9-12 weeks. Over the summer, the wait stretched to 19 weeks on average, according to Susquehanna Financial Group. But as of October, it has ballooned to 22 weeks. It is longer for the scarcest parts: 25 weeks for power-management components and 38 weeks for the microcontrollers that the auto industry needs, the firm said.
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