More than half of industry leaders believe chip shortage will end mid-2023 | Manufacturing Asia

More than half of industry leaders believe chip shortage will end mid-2023

Only 20% believe it will last until 2024 or later.

The global chip shortage that has been plaguing the technology industry for the past two years is nearing its end, according to the 2023 KPMG Global Semiconductor Industry Outlook

Based on a survey of semiconductor executives, the industry's supply-demand imbalance has lessened, and the stabilisation of the global chip shortage is fast approaching or already here. The industry could be shifting from a constrained environment, where it was difficult to get products, to one of abundance driven by excess inventory and weakened demand.

More than two-thirds of respondents believe that by mid-2023, the supply shortage will have eased. 15% think supply and demand are already in balance for most products. 

The survey also asked respondents when they think the next excess supply of semiconductor inventory will occur. One-quarter believe there is already an excess, whilst another 31% think the excess will occur in 2023. Another 35% feel the surplus will happen between 2024 and 2026, whilst 9% believe demand will keep increasing, and there will not be an inventory excess in the next four years.

The report reflected the need for new chips softening after an extended period of high demand, inflation driving production costs up, and new foundries being created outside of Asia adding capacity. 

However, the findings also revealed that the expectations for supply deficits or excesses will most likely vary by product line, sector, and application. Pockets of the ecosystem have a huge oversupply, like memory, whilst other sectors, if they are feeding a still-growing end market like automotive, are still climbing out of supply deficit.

In the report, semiconductor executives rank excess semiconductor capacity as a far more important industry issue than semiconductor production constraints.

“Softening demand in today’s tight global economic climate is rebalancing product in the semiconductor industry. According to our  research, many people in the know are saying the chip supply shortage is already over,” Chris Gentle, Partner, Global Semiconductor Practice, KPMG LLP said.

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