Semi Shortage May Let Up For Autos, But Broader Supply To Remain Limited Until 2022

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by Tyler Durden
Sunday, Jul 25, 2021 - 08:45 AM

The global semiconductor shortage we have been reporting on for the better part of the last year looks as though it could finally be turning a corner for the automotive industry. Smartphone production, however, may have to continue to suffer deficient supply until well into 2022, according to a new report by Reuters.

Supply for the auto sector could improve in coming months as China has picked up some of the production slack that Taiwan hasn't been able to meet, according to ING Greater China chief economist Iris Pang.

While Taiwan has run into the headwind of continued Covid-prevention measures disrupting imports and exports, some company have shifted production to China. 

Pang commented: "China gained 5% on the chip shortage in terms of GDP - Taiwan semiconductor companies have planned well and built large factories in mainland China."

"Taiwanese semiconductor companies are tailoring making chips for autos, so the chip shortage should be solved for autos in a few weeks, but other electronics' chip shortage problem persists," Pang continued. Pang said that even crypto miners were looking for ways to recycle "used" chips - a sign that there was still a meaningful shortage. 

Despite a small respite for the auto industry, the outlook for the broader semiconductor production picture still looks gloomy for the rest of 2021. Adam Khan, founder of AKHAN Semiconductor thinks supply will continue to be disrupted until second quarter of 2022. 

Andrew Feldman, CEO of chip startup Cerebras Systems, agreed. He told Reuters that vendors were still quoting lead times of up to 32 weeks for new chips. 

Dan Hutcheson, CEO of chips-focused VLSI Research told Reuters that when it's all said and done, the semiconductor chip industry could grow between 21% and 25% in 2021. The Philadelphia Semiconductor Index has outpaced the Nasdaq so far this year with gains of 16% versus 13%.