Kt Kingtronics - When Will the Global Chip Shortage End ?

With the changing economic landscape and evolving consumer behavior, industries will continue their path of digital transformation. This means that the demand for semiconductors will increase. This prompts chipmakers and governments worldwide to work hard in closing the gap.

TSMC, the world’s leading semiconductor foundry, has pledged to invest $100 million to increase capacity over the next three years. Samsung and SK Hynix have teamed up with the South Korean government and spent $451 billion for the same venture.

Members of the European Union have their plans as well. The UK government is yet to reveal what they are precisely, but the idea is to help the local chip sector grow its capacity in their supply chains.

Both private and public sectors are determined to end the chip shortage. However, many challenges (policy making, local and international covid restrictions, etc.) need to be addressed before things get going.

Industry experts were optimistic at first, expecting the chip supply to recover by the end of 2021. Historically, demand for semiconductors declines every fourth quarter of the year, which should give chipmakers a chance to catch up.

That is not the case so far. It appears that the decrease in demand is not big enough for foundries to make a significant dent in the current imbalance.

They were forced to revise their initial opinion, and they now fear that the chip shortage could last until next year, maybe even until 2023.