Notification Center

This is our new notification center. Inside, you will find updates on the most important things happening right now.

Notifications

Hmm, push notifications seem to be disabled in your browser. You can enable them from the 'Settings' icon in the URL bar of your browser.

www.phonearena.com

What chip shortage? The world will soon be drowning in chips says analyst

2
What chip shortage? The world will soon be drowning in chips says analyst
During all of 2021, we've heard about a shortage of chips affecting consumer electronics companies and automobile manufacturers. But according to Fortune, a shift has taken place and the world will soon be awash in chips. Lillian Li, vice president and senior credit officer at Moody’s, says, "All the world’s advanced economies, including the U.S., the EU, South Korea, and China have set out plans to advance capacity in the domestic semiconductor industry."

For example, in the U.S. President Biden wants to provide the domestic semiconductor industry with $52 billion in incentives from a bill being debated by lawmakers. By 2024, 5nm chips will be rolling out of TSMC's U.S. factory in Phoenix. The EU plans on committing $160 billion of COVID recovery funds in order to bring its share of the global semiconductor manufacturing industry to 30% from the current 20% by 2030.

South Korea wants to spend $450 billion over the next decade to increase the capacity of its chip business. And Moody's reported on Monday that China's spending on semiconductor development rose 407% on an annual basis. The country has been trying to reduce its reliance on semiconductor imports. Additionally, Beijing would love to have more control over its ability to obtain semiconductors after U.S. bans made it more difficult to do so. 

The chip shortage in the auto industry came about when demand for new cars during the pandemic surprised manufacturers forcing them to order more chips for their cars. Demand soon topped supply leading to panic buying and long lead times. Once the panic comes to an end, chip supplies could swamp demand. Moody's Li says that because China is the country most interesting in building its domestic chip supply, it also could find itself with a huge glut of semiconductors.

Li adds, "For China, developing domestic semiconductors has pros and cons. The advantages, such as avoiding geopolitical insecurities, are very apparent. But the risk of spurring overcapacity remains." Industry analyst Daniel Nenni says to expect a chip glut unless "there is some big boom in semiconductor demand."

New reasons to get excited every week

Get the most important news, reviews and deals in mobile tech delivered straight to your inbox

FCC OKs Cingular\'s purchase of AT&T Wireless