The news: Chip delivery times remain lengthy as component shortages continue. Meanwhile, chip inventories in certain markets are exceeding demand, per the Taipei Times.
No end in sight: The chip shortage was expected to turn the corner in late 2022 and early 2023, but global scarcity was compounded by geopolitical strife.
- Chip delivery times increased to 25.8 weeks in December, up six days from the previous month, per the Susquehanna Financial Group.
- Automotive chipmakers are sold out until 2024, per Ars Technica, resulting in manufacturers like Toyota limiting vehicle orders.
- “Lead times for nearly every product category witnessed all-time highs, with power management and MCUs [microcontrollers] leading the charge,” said Chris Rolland, analyst for Susquehanna.
The supply chain is out of whack: The lack of diversification and slow adjustments in the chip sector are taking their toll and could lead to a period of imbalance for supply chains.
- Rising interest rates, recession fears, and shrinking demand for PCs and consumer electronics are leading to overstocked chip inventories.
- While the automotive sector faces shortages, PC and smartphone chips are in danger of oversupply mostly due to the slowdown in consumer spending.
- Chip manufacturers are rushing to hedge their bets for anticipated demand by diversifying future plant locations.
- TSMC is building chip factories in the US, Japan, and Europe while investing 1.86 trillion New Taiwan dollars ($60.4 billion) in a new Taiwanese factory.
A year too late: None of these new chip factories is expected to contribute to global supplies until they go online in 2024. Until then, supply chain scarcity will continue drive up product pricing.
- Expect shortages in the automotive industry to continue to boost vehicle prices and cause delivery delays.
- Automakers sold 13.9 million cars, trucks, SUVs, and vans in 2022, per Repairer Driven News, the lowest sales number since 2011, when the economy was recovering from the Great Recession.