Chip Shortage Situation Worsens: Chip Lead Time Reached 18 Weeks

Various industries, from automakers to consumer electronics products, are facing chip shortage problems. And the situation is worsening. It turns out the waiting time for chip products has even reached 18 weeks.

According to a study by the financial technology company Susquehanna Financial Group, the chip lead time in May this year increased by 7 days compared with the previous month, reaching 18 weeks. This shows that it is more difficult for chip manufacturers to meet market demand. This gap is already the longest lead time since Susquehanna started tracking relevant industry data in 2017. And it is now more than 4 weeks longer than the last peak chip lead time in 2018.

chip shortage

The power management chip is one of the main reasons for the overall lengthening of the chip delivery time. The lead time for these chips reached 25.6 weeks. This is nearly two weeks longer than a month ago. Nevertheless, the problem of chip shortages is still widespread.

Susquehanna analyst Chris Rolland wrote: “The broad-based nature of the shortages is highlighted by the data, as most key product categories (power management, discretes, analogs, passives) have seen LT expansion.”

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Investors look for clues about market demand trends from the lengthened delivery time. At the same time, they say the lengthened delivery time is a sign that chip users may panic and order too much product. Thus, the entire chip industry may appear in a situation of oversupply. Roland said that he is worried that there is not enough market demand for terminal equipment with chips.

This May Last Long

Although the overall delivery time of Broadcom, NXP Semiconductors, STMicroelectronics and Texas Instruments has been extended, some areas have begun to catch up with market demand. Roland writes that the delivery time of a small processor that implements everything from a car to a washing machine, a microcontroller, has been reduced by more than a week. According to Susquehanna, the delivery time of analog chips has increased. But the rate of increase has been slower than before.

Also Read: Global Chip Shortage May Continue For Many More Years – Intel

Susquehanna said that the shortage of photovoltaic components, including those that help convert solar energy into electricity, is increasing. Most of the chip manufacturing companies listed in the report regard automakers as their main customers.

The chip shortage has the greatest impact on the automotive industry. The latter will lose more than 100 billion U.S. dollars. Other industries have also felt the pressure. Faced with a shortage of chips, many electronic product manufacturers, including Apple, cannot meet the market demand for their products.

Broadcom CEO Chen Fuyang and other chip industry executives warned against over-interpreting the extension of the delivery period. They believe that the extended delivery period also proves that customers have a better understanding of the chip industry and are willing to sign long-term supply agreements that cannot be cancelled.

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