Global chip shortage to persist till Q2 2022: Gartner

New York: The global semiconductor shortage will persist through 2021 and is expected to recover to normal levels by the second quarter of 2022, a Gartner report said on Wednesday.

Across most categories, device shortages are expected to be pushed out untill the second quarter of 2022, while substrate capacity constraints could potentially extend to fourth quarter of 2022.

“The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types in 2021. Foundries are increasing wafer prices, and in turn, chip companies are increasing device prices,” said Kanishka Chauhan, principal research analyst at Gartner.

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The chip shortage started primarily with devices, such as power management, display devices and microcontrollers. 

The shortage has now extended to other devices, and there are capacity constraints and shortages for substrates, wire bonding, passives, materials, and testing, all of which are parts of the supply chain beyond chip fabs. 

The chip shortage makes it essential for supply chain leaders to extend the supply chain visibility beyond the supplier to the silicon level, which will be critical in projecting supply constraints and bottlenecks and eventually, projecting when the crisis situation will improve, said the Gartner report.

“Tracking leading indicators, such as capital investments, inventory index and semiconductor industry revenue growth projections as an early indicator of inventory situations, can help organisations stay updated on the issue and see how the overall industry is growing,” said Gaurav Gupta, research vice president at Gartner.

The original equipment manufacturers (OEMs) with smaller and critical component requirements must look to partner with similar entities and approach chip foundries and/or OSAT players as a combined entity to gain some leverage, the report suggested.

Qualifying a different source of chips and/or OSAT partner will require additional work and investment, but it would go a long way in reducing risk. 

“Additionally, creating strategic and tight relationships with distributors, resellers and traders can help with finding the small volume for urgent components,” said Gartner.

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