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Global chip shortages will likely last until 2023

KUALA LUMPUR (Oct 29): Wait times for chip deliveries have continued to climb above a healthy threshold of 9-12 weeks.

Citing Pennsylvania-based trading and technology firm Susquehanna Financial Group, the Wall Street Journal (WSJ) on Thursday (Oct 28) said that over the summer, the wait stretched to 19 weeks on average.

But as of October, it has ballooned to 22 weeks.

The report said it is longer for the scarcest parts: 25 weeks for power-management components and 38 weeks for the microcontrollers that the auto industry needs, the firm said.

Meanwhile, Wells Fargo Investment Institute senior global equity strategist Scott Wren was quoted as saying that chip shortages will likely last until 2023.

Wells Fargo Investment Institute recently revised down its U.S. GDP forecast to 6.3% from 7% as the chip shortage limited the supply of consumer goods.

WSJ said a supply bounceback this year relied on rosy assumptions that already maxed-out production wouldn’t face further setbacks.

But the chip-making process is under duress from beginning to end.

The report explained that basic building-block materials such as substrates are in short supply.

Mishaps from bad weather and fires have interrupted wafer production.

Meanwhile, the final stage of manufacturing has been undercut by virus outbreaks and subsequent factory closures in Malaysia, which specialises in product packaging.

Global shipping constraints have added to disruptions and delays.

Chip assembly can require that parts travel up to 25,000 miles before becoming finished products, according to a report by Accenture and the Global Semiconductor Alliance.

http://www.theedgemarkets.com/article/global-chip-shortages-will-likely-last-until-2023

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