omicron: Omicron to extend chip shortage to 2022 although supply chain management has improved: Moody’s
The chip shortage developed early in the pandemic as plant closures reduced supply while the shift to remote working increased demand, resulting in an imbalance that worsened over time. . The shortage worsened during the Delta surge in mid-2021, which hit Malaysia, Vietnam, Taiwan, Korea and Japan, key countries in the semiconductor supply chain. At that time, less than half of the population of these countries had received a dose of a Covid-19 vaccine, and only a quarter were fully immunized.
âNow more than half of the population is vaccinated in these countries, and production is unlikely to be hampered in the same way as it was during the Delta wave of mid-2021. Based on what we know about the efficacy of currently available vaccines in combating the Omicron variant, Omicron’s push is expected to have a more moderate impact on the semiconductor chip supply chain, âthe report states. .
As with countries and vaccines, companies were initially caught off guard by the effects of Covid-19 on the chip supply chain due to their production model. Many companies that embraced just-in-time manufacturing were ill-equipped to deal with shortages of raw materials and key inputs such as chips and other electronic components that reduce production.
Now companies are learning how to mitigate supply chain disruptions by building up inventory and exploring alternative sources of supply. “Companies are learning to cope with these increasingly common shortages by building up buffer stock and exploring alternative sources of supply,” the report says.
Over the past year, capital spending by chipmakers has increased by 15% and prices have also skyrocketed, with double-digit annual price growth for many types of chips helping to moderate the price. request. âThis has been an incredible boon for chipmakers, with sales skyrocketing over 25% in 2021. Although we expect moderate sales growth to 10% this year, the secular move towards a global increasingly digital bodes well for the industry, which is at the heart of all modern electronic devices.
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Major chipmakers in Taiwan, Korea and China have all announced plans to expand nationwide as well. India also announced a new program to get major semiconductor manufacturers to build factories in the country, especially those in Taiwan, with which it is discussing a free trade agreement. However, supply constraints caused by Covid-19 clusters in various parts of the world will also exacerbate chip shortages for some chip applications (such as DRAM in the case of the current Xi’an lockdown). Major new foundries under construction will not be operational until after 2023, so lead times will be extended as supply remains limited, Moody’s said.
âMost new foundries (except the one in Japan) are designed to make next-generation chips of 7 nanometers or less, which limits the supply of older-generation chips which are also typically consumed in addition. large quantities. The types of chips that are likely to grow the most in the near term are those used in logic and sensor applications, with other areas such as EVs, the Internet of Things and 5G technology driving demand further. … We expect these dislocations to be temporary and that long-term trends will dominate the flea cycle, âthe report says.