Shortage Slowdown ⏱

by 27 Oct, 2021

Shortage Slowdown

One of the by-products of the economic recovery has been the shortage in chips. Not the snack you eat, but something a lot more essential to the world. Chips, or semiconductors, are used in things like phones, obviously, but also for the technology in cars and refrigerators. With the global increase in consumer spending going faster than expected, more chips have been needed, but supply hasn’t been able to keep up, leaving us in a pickle. Recently, we’ve talked about how car companies, especially EV ones, have been looking into silicon carbide as an alternative chip, but these are still expensive.

Fortunately, it looks like the chip shortage could be coming to a slowdown. Delivery times for chips have slowed the most in the last 9 months, with the time increasing by only 1 day to about 21 days. This slowdown is causing some to believe that this could be the peak of the shortages, a trend we are seeing with the economy a lot. However, there is a risk that this could be a false positive, and that has strong arguments too. The supply chain constraints have started to become worse, and that could affect the data in the coming months. Even then, the companies face another problem after all of this, which is oversupplying. What usually happens is that during a period of shortage, customers purchase more than what’s needed, and then cancel requests once it returns to normal. With the positive news comes additional worries, but hopefully this is a step forward. Do you think this is the peak of the chip shortage?

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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