Chip shortages are only getting worse.
Intel CEO Pat Gelsinger says the shortage won’t end until 2023. “We’re in the worst of it now, every quarter, next year we’ll get incrementally better, but they’re not going to have supply-demand balance until 2023,” he said, as quoted by the Independent.
Stellantis CEO Carlos Tavares says the shortage will easily drag into 2022.
STMicro CEO Jean-Marc Chery doesn’t see an end to the shortage before the first half of 2023. iPhone supplier Foxconn says shortages could last until the second half of 2022.
Even Scott Wren, senior global equity strategist at Wells Fargo Investment Institute as noted by The Wall Street Journal, “said he would have thought six months ago that chip shortages would start easing by this time. But now he said they will likely last until 2023. Wells Fargo Investment Institute recently revised down its U.S. GDP forecast to 6.3% from 7% as the chip shortage limited the supply of consumer goods.”
It’s become a real disaster with no easy fix.
Worse, demand isn’t slowing, with multiple industries – autos, electronics, medical devices, phones, networking equipment, etc. – needing immediate supply.
According to Goldman Sachs, 169 industries are being impacted by shortages.
“The global auto industry will crank out 4 million fewer vehicles this year than planned and forfeit $110 billion in sales,” says Go Banking Rates. “Bloomberg reported that Sony won’t produce adequate supplies of its PlayStation 5 console until at least 2022. Whirpool’s China operation was buckling under a 10% chip shortage.”
However, there is a bright side.
The supply-demand issue is creating a massive investment opportunity for companies, such as NXP Semiconductors (NXPI), Microchip Technology (MCHP), the Invesco Dynamic Semiconductors ETF (PSI), STMicroelectronics (STM), and ON Semiconductor Corp (ON).