Is there still a chip shortage?
Depending on who you ask, and the focus of that company, you will get different answers. But in general, the short answer is; No.
Evertiq has reported extensively on the semiconductor shortage over the past few years. During this period the industry experienced a major increase in demand during the pandemic at the same time as it was experiencing major supply chain disruptions. During the last year though, we started seeing a slow return to something more of a normal market as device sales slowed down towards the end of the year inventory began to recover – but does that mean that the chip shortage is over?
Gartner, a research and advisory firm, recently published a Q&A with its VP Analyst, Gaurav Gupta, on the current semiconductor market dynamics and the impact that chip inventory levels continue to have on the electronics industry.
So, what insights does the analyst have into the big question that everyone desperately wants an answer to – “Is there still a chip shortage?”
As Gaurav Gupta points out in the Q&A, the semiconductor market is entering into a major correction cycle as demand for PCs, smartphones, tablets and other consumer electronics has significantly declined.
And looking at the Gartner Index of Inventory Semiconductor Supply Chain Tracking (GIISST) for the fourth quarter of 2022, we see the entry into the moderate surplus zone. However, Gupta states that while the overall index is no longer in a shortage zone, inventory imbalances does still exist, which means that some chips can be found in bulk, while others remain scarce.
Just look at the memory market. Evertiq has previously reported that several manufacturers are reducing their output to align with current market demand. And we are still seeing a significant oversupply. Analog components are also on the verge of being oversupplied as a result of weakening demand and new 300mm production capacity. But as Gupta mentions, optoelectronic chips, on the other hand, continue to see inventory depletion as OEMs panic-buy from LED vendors amidst ongoing COVID-19 uncertainties in China.
“Overall, most chip categories are exhibiting an improvement in inventory. Semiconductor demand from consumer markets continues to deteriorate due to the weakening macroeconomy, easing shortages. There is a high chance of nonconsumer markets – including networking, servers, storage – following a similar trend in 2023, which will help further ease inventory imbalances and reduce pricing.” the VP Analyst says in the Q&A.
He also to states that the inventory index will continue to climb until the second quarter of 2023, when it will start to decline as demand recovers.