Is global semiconductor supply deficit over?

Team Veye | 20-Nov-2022 global semiconductor supply

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.


Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website, and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024