Semiconductor Chip Shortage Could Extend Well Into 2022

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【Summary】Even then, experts don’t believe that supplies will recover until 2023. So, car shoppers are looking at paying absurdly high prices for new and used cars for at least another year.

Original Vineeth Joel Patel    Nov 16, 2021 6:00 AM PT
Semiconductor Chip Shortage Could Extend Well Into 2022

The ongoing semiconductor chip shortage has been an issue for automakers and consumers. Car companies don't have the necessary chips to produce vehicles, despite the high demand for new cars. This has led dealerships to charge crazy prices for vehicles that consumers have to pay if they want to get into a vehicle. While automakers are doing everything they can to try and get factories up and humming again, that's impossible because of the shortage. And there's some more bad news, as it doesn't look like the chip shortage will end anytime soon.

Shortage To Continue Until 2023

According to a report, Automotive News, citing data from IHS Market, claims that the automotive industry will not enter into a recovery phase from the current lack of semiconductor chips until the first half of 2023. For consumers and automakers, that means at least another year of inventory shortages and incredibly high prices. There is some good news, though, as the forecast believes that the chip shortage will stabilize in the second half of 2022.

CNBC spoke with the CEO of semiconductor company Marvell Technology, Matt Murphy, who claimed that the chip shortage will likely last the full duration of 2022. "Right now, every single end market for semiconductors is up simultaneously; I've been in this industry 27 years, I've never seen that happen," said Murphy. "If it stays business as usual, and everything's up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year."

As Murphy points out, a lot of chip producers are looking to expand factory capacity. But that won't be happening until 2023 and 2024. So, there's going to be a painful period of waiting for everyone.

No Slow Down In Sight

The issue with semiconductor chips is that multiple things use them. Smartphones, laptops, smart televisions, and cars all use chips. While demand for new cars has skyrocketed, so has the demand for other consumer electronics. If it were just the automotive industry that was struggling, the issue wouldn't last another year, but demand for everything is outrageously high. So, unless something gives, there's really no end in sight for the chip shortage. With Christmas right around the corner, we don't see anything slowing down.

Until then, automakers are looking at serious losses. IHS Market's forecast claims that automakers will lose 6.2 percent of their predicted production capability. That means roughly 5 million fewer cars will be made this year. U.S. auto sales are expected to drop at least 13 percent in the third quarter of 2021 because of the chip shortage.

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