Semi-conductor shortage to persist in 2022

With supply chains still in crisis, and a new coronavirus variant already wreaking havoc around the world, a new study suggests the technology market will be stung by chip shortages in 2022. Some improvement is expected, however, with wait times for semi-conductors forecast to half in the coming year.

Emerging in 2020, the global chip shortage is an ongoing crisis in which the demand for integrated circuits, commonly known as semi-conductor chips, is greater than the supply. This has affected more than 169 industries, and has led to major price increases, shortages and queues amongst consumers for cars, graphics cards, video game consoles, computers, and other products that require such chips.

Illustrating the severity of the crisis, before 2021, the crisis was forecast to incur losses of approximately €60 billion in the automotive sector. By May, however, losses relating to the chip shortage stood at over €90 billion.

Now, a new study from Deloitte suggests that as Omicron spreads around the world, the global chip shortage will likely last some time to come. The Big Four firm anticipates that it could push component lead times into 2023.

The good news is that chipmakers and governments are working to increase their production. The researchers found that the world’s three largest makers of semi-conductors have announced capital expenditures of more than $60 billion for 2021, with more expected in 2022. Meanwhile, the report noted the proposed $52 billion CHIPS for America Act, which would help fund domestic semi-conductor research, design and manufacturing.

However, those efforts will take time to deliver. In 2022, customers should expect to wait between 10-20 weeks to receive chips they require; and while this is half the time seen in mid-2021 when they would wait between 20-52 weeks for multiple kinds of semi-conductors, it means the semi-conductor industry is unlikely to balance out before early 2023.

Researchers Duncan Stewart, Dan Hamling, Ariane Bucaille and Gillian Crossan noted, “Increasing chip manufacturing capacity is a slow process, and rightly so: Cutting-edge chips have been called the most complex devices ever made, and it takes the most expert chipmakers in the world billions of dollars, years, and all of their expertise to get a new plant up and running.”