While other items such as backpacks, headphones, and even clothing are becoming increasingly “smart,” the market for silicon chips has recently peaked. As a result, global semiconductor producers are experiencing one of the most severe chip shortages in the industry’s history. According to recent news, major chip manufacturers such as TSMC, Nvidia, and Intel have stated that the current chip shortage would last until 2022, with the possibility of extending into 2023.
Chip Shortage Issue
Let us give you a short rundown of what I’m talking about if you don’t know what I’m talking about. As more and more things have become “smart,” demand for system-on-chips has outpaced supply from manufacturers. As a result of the scarcity of silicon chips, many businesses are unable to buy as many as they require. It’s impacting the mobile industry as well, with Samsung already announcing that the Galaxy Note series will not be launched this year, as previously said.
Increasing Demand Reducing Supply
According to news, the world’s largest chip manufacturing firm, Taiwanese Semiconductor Manufacturing Co (TSMC), reported in a recent call with market analysts that the seriousness of the current chip shortage would likely decrease in the coming days. The overall scarcity of silicon chipsets, on the other hand, will persist this year and possibly into the next.
According to reports, the firm is running at “over 100% utilization” to satisfy new chipset demands.
Furthermore, TSMC announced that it would spend about $30 billion in growth, citing the current scenario, as its gross margin has fallen to 49.5 percent, compared to 51.5 percent that the company planned to achieve this year.
Also, the Taiwanese chipmaker forecasted a 20% increase in sales over the previous year.
Will Chip Production Get Back To Normal After Two Years?
“Overall demand remains quite high and tends to outweigh supply while our channel inventories remain very lean,” said Nvidia, one of TSMC’s customers. Furthermore, the company stated that it expects the demand-supply imbalance in SoCs to persist throughout the year.
“We see demand continuing to be high,” TSMC CEO C. C. Wei said, according to Bloomberg. “I hope we will deliver more capacity to serve our customers in 2023.” We’ll start to see the supply chain tightness loosen a little bit at that point.”
Wei’s remarks echo those of Intel’s current CEO Pat Gelsinger, who cautioned earlier this week that addressing the shortage could take a few years, according to The Washington Post.
“Capacity can be built in a couple of years,” Gelsinger said. Nvidia’s CFO Colette Kress recently said that the company expects “production to continue to outweigh supply for most of this year.”
Colette Kress, Nvidia’s CEO, is said to be hoping for “enough supply to sustain sequential development beyond Q1 [2022].” It would, however, be unable to keep up with the rising demand.
As a result, we should expect the existing chip shortage to last at least another year before stabilizing.
As a result, in 2022 and 2023, we should expect more businesses to streamline their mobile and other SoC-based product lines.