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Chinese experts say chip shortage is the new normal

We live in a time of chip shortage in which the entire industry is turned upside down, and the problems are undeniable: there is no stock of consumer products, and what little there is usually falls into the hands of speculators who then sell it on the market second-hand at much higher prices. At the same time, due to shortages, the manufacturers themselves are raising prices and, in the end, the ones who pay are the consumers. The most unfortunate thing about this is that despite the efforts that many countries are making to strengthen the industry to alleviate the situation, experts say that it will take a long time to get out of it.

Chip shortages have become the new normal

According to the semiconductor market development law, it is normal for chips to run out and there are certain burnout cycles. In the case of constant supply, the demand is sometimes strong and sometimes weaker, and there is a dynamic change from strong to weak and from weak to strong but the current dynamics is causing imbalances and contradictions; Currently, the cycle of scarcity has undergone tremendous changes to the point that experts say it is already the new normal.

Before getting to this, the development of the semiconductor industry followed a syllogism, from inventory to completion and reconfiguration of the same. However, this theory is no longer applicable since since 2016 companies have been increasing their inventories when prices were high, generating a large imbalance between supply and demand.

«From 2016 to 2021 the market has experienced a chip shortage to varying degrees. In 2016 there was a shortage of DRAM, in 2017 in addition to DRAM, there was a shortage of NAND Flash and a shortage of semiconductors since 2018. ” said Chen Nanxiang, CEO of Changjiang Electronics.

As these experts from the Chinese Semicon 2021 say, one side of the new normal is the mismatch between chip production capacity and market demand, and the other side means that the semiconductor industry has entered a new stage of development. Explained in another way, we all know that shortage problems come because demand is now much higher than supply, but they say that the good part is that this has caused the reaction of companies and countries so that the industry enters a new stage of development.

In short, what they are telling us is that no matter how much governments and companies have invested in the semiconductor industry to try to alleviate this situation of chip shortage, it is still going to last a long time and we will have to get used to it as a new normal because they foresee that it will last for many years until the situation returns to normal.

When will the semiconductor situation normalize?

We have talked at length about this subject and as you well know, it is very difficult to be able to discern when it will end, but we can only agree with the Chinese experts with respect to their prediction, at least in part: this situation is not going to be solved in the short term, and maybe not even in the medium term.

Apple M1 + RAM

Today all products use chips of one type or another, and with the launch of the new generations of graphics cards and processors, the new video game consoles, new smartphones, the new Apple processors and, in general, the new and increasingly powerful consumer electronics devices, demand does not appear to be reduced in the coming years.

The demand is much higher than the supply, and although attempts are being made to remedy this by increasing the production capacity of companies to generate a greater supply, this cannot happen overnight, it takes a long time to create new ones. factories and set them up to make the very complicated chips necessary for the industry. At the same time, by the time this happens these chips may have become obsolete, so we would return to the starting point.

In short, we will have no choice but to get used to this chip shortage situation because it is not something that will be solved in the short term. The only thing that companies could do today is delay the launches of their new products until they have accumulated enough stock. For example, if NVIDIA releases a new generation of graphics cards without having stock to sell them is an absurd launch, but if they announce a new graphics card having, say, 100,000 units already manufactured and ready to ship to stores, then things will change quite a bit. . Now, how long would it take to stockpile so many units? Surely too much and that is why they are rushing the launches even without having stock to sell. Absurd, but that’s the way it is.