Chip delivery times fall, but so does demand as global economic conditions worsen
(2022/09/09)
- Reference: 1662722114
- News link: https://www.theregister.co.uk/2022/09/09/chip_delivery_times_down/
- Source link:
Chip delivery times shrank in August but while some are painting this as a sign that semiconductor shortages are easing, it is most likely an indicator that demand is slowing as economic conditions worsen.
Semiconductor lead times averaged 26.8 weeks during August, Bloomberg said, quoting a report from trading and technology financial outfit [1]Susquehanna International .
This is actually just a single day shorter than lead times were in the preceding month, which will not come as much relief to beleaguered manufacturers struggling to deliver their own products that contain chips.
[2]
What this actually points to is slowing demand for some technology products, such as smartphones and PCs, Susquehanna analyst Chris Rolland admitted, as consumers rein in spending in the face of growing inflation and rampant energy prices.
[3]
[4]
But the semiconductor industry is now facing high inventory levels due to a combination of the disruptions to supplies caused by the pandemic and its lockdowns, and customers over-ordering with multiple suppliers in an attempt to secure deliveries of components.
Last month, a report from [5]Jefferies Research indicated that semiconductor inventory levels in Europe had risen sharply in Q2 2022, in many cases to new historical highs, while demand was weakening and sharp cuts in orders were being reported by some digital logic and memory suppliers.
[6]HP's consumer PC biz shrinks by a fifth as inflation bites
[7]Chips still down for Toyota: Low semiconductor supplies dampen output
[8]Infineon ups 2022 revenue forecast as chip drought persists
[9]Juniper says 400G network kit in demand, supply chain worries easing
Jefferies warned that an inventory correction is now starting, and will likely last through the entire first half of 2023: "We believe the semiconductor industry is heading into the deepest downcycle and inventory correction in over a decade."
The company noted that digital logic and memory chip suppliers such as Intel, Western Digital, Nvidia, and Micron have already begun to lower their earnings guidance sharply, and predicted that the semiconductor market will bottom out at around a 20 percent year-on-year decline by mid-2023.
[10]
Not all types of semiconductor are equally affected, however. Susquehanna's Rolland said that power management, microcontroller, and optoelectronic devices still had extended lead times, with makers such as Microchip Technology and Infineon struggling to keep up with demand.
One of the reasons for this has been the lack of investment in the mature process technologies typically used to manufacture such components, [11]IDC said earlier this year, for which there is no quick fix as it takes years to bring online new capacity.
Jefferies noted that the analog/power/MCU segment had so far been "resilient," but warned it was also expecting to see an inventory correction in the automobile and consumer markets that would affect manufacturers of these chips as well in coming quarters. ®
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[5] https://www.jefferies.com/
[6] https://www.theregister.com/2022/08/31/hp/
[7] https://www.theregister.com/2022/08/30/toyota/
[8] https://www.theregister.com/2022/08/03/infineon_ups_2022_revenue_forecast/
[9] https://www.theregister.com/2022/07/27/juniper_networks_q2_2022/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YxtjFgXtlgD7TZvklq@xdQAAAMo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2022/01/28/idc_chip_shortages/
[12] https://whitepapers.theregister.com/
Semiconductor lead times averaged 26.8 weeks during August, Bloomberg said, quoting a report from trading and technology financial outfit [1]Susquehanna International .
This is actually just a single day shorter than lead times were in the preceding month, which will not come as much relief to beleaguered manufacturers struggling to deliver their own products that contain chips.
[2]
What this actually points to is slowing demand for some technology products, such as smartphones and PCs, Susquehanna analyst Chris Rolland admitted, as consumers rein in spending in the face of growing inflation and rampant energy prices.
[3]
[4]
But the semiconductor industry is now facing high inventory levels due to a combination of the disruptions to supplies caused by the pandemic and its lockdowns, and customers over-ordering with multiple suppliers in an attempt to secure deliveries of components.
Last month, a report from [5]Jefferies Research indicated that semiconductor inventory levels in Europe had risen sharply in Q2 2022, in many cases to new historical highs, while demand was weakening and sharp cuts in orders were being reported by some digital logic and memory suppliers.
[6]HP's consumer PC biz shrinks by a fifth as inflation bites
[7]Chips still down for Toyota: Low semiconductor supplies dampen output
[8]Infineon ups 2022 revenue forecast as chip drought persists
[9]Juniper says 400G network kit in demand, supply chain worries easing
Jefferies warned that an inventory correction is now starting, and will likely last through the entire first half of 2023: "We believe the semiconductor industry is heading into the deepest downcycle and inventory correction in over a decade."
The company noted that digital logic and memory chip suppliers such as Intel, Western Digital, Nvidia, and Micron have already begun to lower their earnings guidance sharply, and predicted that the semiconductor market will bottom out at around a 20 percent year-on-year decline by mid-2023.
[10]
Not all types of semiconductor are equally affected, however. Susquehanna's Rolland said that power management, microcontroller, and optoelectronic devices still had extended lead times, with makers such as Microchip Technology and Infineon struggling to keep up with demand.
One of the reasons for this has been the lack of investment in the mature process technologies typically used to manufacture such components, [11]IDC said earlier this year, for which there is no quick fix as it takes years to bring online new capacity.
Jefferies noted that the analog/power/MCU segment had so far been "resilient," but warned it was also expecting to see an inventory correction in the automobile and consumer markets that would affect manufacturers of these chips as well in coming quarters. ®
Get our [12]Tech Resources
[1] https://sig.com/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YxtjFgXtlgD7TZvklq@xdQAAAMo&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YxtjFgXtlgD7TZvklq@xdQAAAMo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YxtjFgXtlgD7TZvklq@xdQAAAMo&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.jefferies.com/
[6] https://www.theregister.com/2022/08/31/hp/
[7] https://www.theregister.com/2022/08/30/toyota/
[8] https://www.theregister.com/2022/08/03/infineon_ups_2022_revenue_forecast/
[9] https://www.theregister.com/2022/07/27/juniper_networks_q2_2022/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YxtjFgXtlgD7TZvklq@xdQAAAMo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2022/01/28/idc_chip_shortages/
[12] https://whitepapers.theregister.com/
Karma for component touts
Flak
Time for some karma for those who bought up large stockpiles of components and try to sell them at crazy prices to desperate manufacturers.
Soon please!
Re: Karma for component touts
Anonymous Coward
I think they profited very nicely from having people over a barrel. We use an old Altera part that should be $30 and we've had to pay $400 at one point in the last year.
I'm still seeing Q4 2023 and Q1 2024 on quotes.
It will change
Our products use a lot of chips, probably a hundred or more different chips to get an item up and running but we're told that two of the chips will not be available until January so we're not getting the products built now. Once all the needed chips are available we'll be able to start production again.
I expect this is seen everywhere so eventually, once all the "unavailable" chips can be obtained we can build the entire product range. The current issues are leading us to redesign work so things will change but product construction will increase eventually.