It’s been three months since our last blog on chip shortages, and a lot has changed in that time, so it’s worth an update and sharing some thoughts on what are the ramifications that may or may not be affecting our industry’s ability to plan in the mid- to long-term.
Peter Clarke, a long-standing well-informed observer of semiconductor industry trends, reported earlier this month on eeNewsEurope that industry growth is slowing https://www.eenewsanalog.com/en/fall-in-global-chip-market-growth-accelerates/ – we’re still talking about 13 percent growth – it’s just less growth.
Some volatility clearly remains in the market, but the companies with the ‘right’ focus on emerging and fast growth markets are benefiting. The latest set of results from mixed-signal IC leader OnSemi were particularly healthy. It will always be the case that changing market conditions and industry shifts in terms of technologies and applications, benefit those companies that can adapt and evolve and those that simply back the right horse.
It is also worth mentioning, as we tackled this in the previous post, the world was facing a huge supply issue post-covid and entering periods of significant demand hikes from the automotive and consumer electronics industries, in particular.
The response to this supply issue was for the well-funded chip manufacturing giants to ramp up and speed up their development plans – and at the same time to further their globalisation plans, thus addressing geopolitical question marks. TSMC’s fabs in the US, Intel investing in Germany – are some of the moves we have seen so far. Europe’s own appetite for a bigger piece of the semiconductor pie has only been fuelled by the slowdown and capacity crunch.
Gartner also announced recently it is expecting a small drop in chip sales in 2023, following a slowing in mobile phone sales (such a forecasted drop of around 150million, can easily create waves in the semiconductor supply chain in its own right). This is made worse by a predicted 9% drop in personal computer sales by the end of 2022.
Given the mobile handset’s significant size and global scale, a drop in sales is likely to contribute to an easing of the chip shortage issue – probably later this year or early in 2023 – but, combined with the industry’s drive to increase its manufacturing output, could it create oversupply issues?
Well, questions are being asked if the US Chips Act is poorly timed, when the industry is potentially facing a slowdown and oversupply issues. But a committed, long-term investment to attract or retain chip manufacturing is unlikely to be a poor strategic choice, in my opinion.
Time will tell, but as demonstrated by OnSemi, a bit of longer-term planning and strategic marketing in terms of the growth markets, can go a long way to alleviate temporary blips in shortages and oversupply.