Photo: General Motors
The chip shortage that emerged in 2020 is slowly but surely approaching its end. At least, that’s what industry experts seem to believe, as the slowing demand for certain electronics, including PCs, tablets, and smartphones, gives foundries the opportunity to fill the orders for other industries, including the automotive market.
But with the inflation going through the roof and the cost of materials on the rise, there’s a chance the lack of chips would eventually turn into an oversupply that parent companies wouldn’t be able to handle.
Leading supplier VNC Automotive says the end of the chip shortage is already on the radar, but given the prospect of recession is growing, the drought could eventually turn into a flood hurting the industry just as hard.
In an analysis of the changing trends, CEO Tom Blackie says consumers are holding on to their purchases, especially as the cost of living increases due to the rising inflation and the approaching recession that everybody seems to expect. Upgrading devices and buying new products, including cars, would no longer be a priority, so at the end of the day, all the chips that foundries across the world are making might no longer find a buyer.
The current market conditions are so concerning that chipmakers themselves are trying to prepare for the worst.
Blackie says chip manufacturers themselves have reached out to VNC Automotive on several occasions to ask if they want to increase orders, pretty much because they believe they could end up struggling with a large inventory of semiconductors and no clients to sell it to.
At this point, however, carmakers out there are still trying to reduce the disruptions in their daily production. While the end of the chip shortage is indeed on the horizon, it’ll be interesting to see how these companies improve their relationship with chipmakers, especially given larger customers, such as PC and phone manufacturers, have been heavily prioritized in the last few years.
Leading supplier VNC Automotive says the end of the chip shortage is already on the radar, but given the prospect of recession is growing, the drought could eventually turn into a flood hurting the industry just as hard.
In an analysis of the changing trends, CEO Tom Blackie says consumers are holding on to their purchases, especially as the cost of living increases due to the rising inflation and the approaching recession that everybody seems to expect. Upgrading devices and buying new products, including cars, would no longer be a priority, so at the end of the day, all the chips that foundries across the world are making might no longer find a buyer.
The current market conditions are so concerning that chipmakers themselves are trying to prepare for the worst.
Blackie says chip manufacturers themselves have reached out to VNC Automotive on several occasions to ask if they want to increase orders, pretty much because they believe they could end up struggling with a large inventory of semiconductors and no clients to sell it to.
At this point, however, carmakers out there are still trying to reduce the disruptions in their daily production. While the end of the chip shortage is indeed on the horizon, it’ll be interesting to see how these companies improve their relationship with chipmakers, especially given larger customers, such as PC and phone manufacturers, have been heavily prioritized in the last few years.
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