Is global semiconductor supply deficit over?
Team Veye | 20-Nov-2022
Semiconductors shot into the news when their shortages caused reverberations across many sectors. It led to held-up production lines and dented sales, ending with the loss of profitability.
A semiconductor is a material product usually comprised of silicon and possessing specific electrical properties. Semiconductors have become essential for many electronic appliances as well as for social infrastructure that supports our everyday life.
These are very crucial element in the manufacturing of consumer electronics such as smartphones, cameras and computers. Cars, need them for everything from entertainment systems to power steering. The supply crunch was such for the auto industry that it forced car manufacturers to cut production and delivery targets.
Now it is increasingly becoming apparent that the global semiconductor shortage is on verge of getting over. The tell-tale signs are emerging on both the demand and supply fronts.
The business sentiment is reversing quickly because of shrinking demand for consumer electronics, order cancellations and unsold stockpiles at makers of integrated circuits.
The news of the multibillion-dollar smartphone industry cutting around three phases of orders to chipmakers so far in 2022 is in the air. Market research firm Strategy Analytics has already forecast falling demand for 5G phone chips. Smartphone manufacturers stuck with managing high inventories is an additional factor.
TSMC, the world’s largest contract chipmaker, at the time of reporting a record quarterly profit surge for the July to September quarter, warned of a likely decline for the entire semiconductor industry in 2023 and even cut its capital spending forecast by 10 per cent in 2022.
The passage of the CHIPS & Science Act of 2022, is also considered to be good for the semiconductor industry and even better for America. It offers critical investments including $79.344 billion in government spending over 10 years. This could ensure more resilient chip supply chains for key manufacturing industries in the U.S.
However, demand for advanced smartphone chips continued to expand, reflecting robust demand by high-end brands including iPhone. The overall industry might see demand bottom out in 2024.
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