Chipmakers and Their Painful Advice: Don’t Hold Your Breath for the End of the Shortage

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Back in 2021, many analysts and industry experts predicted the chip shortage would come to an end at some point this year. At some level, such a forecast made perfect sense, especially given all the production capacity investments that foundries across the world have been making lately. But now that 2022 is already here, chipmakers are back with the words we’ve all been afraid of: don’t hold your breath for the end of the shortage because it wouldn’t happen this year. Executives who joined the J.P. Morgan Tech/Auto Forum reiterated pretty much the same statement, emphasizing that the demand will continue to be super-strong throughout the year, whereas their production capacity will remain limited. The automotive market, in particular, will continue the struggle. ON Semiconductor, which builds chips specifically aimed at cars, admitted there’s no chance to see the production being aligned with the demand in 2022. In other words, carmakers will continue to have a hard time dealing with the chip supply, but hopefully, the foundries would at least be able to reduce waiting times in a substantial manner. Analog Devices, which also builds car chips, has reportedly explained that its entire supply will be used until at least the end of the July quarter. There are no guarantees things would be improved after that though, and the company says it hopes its output to be increased towards the last months of 2022. But right now, most chipmakers seem to be very pessimistic about the chances of the chip shortage not only to come to an end to this year but to actually ease up in the short term. For carmakers, this can’t be anything but awful news. Most vehicle manufacturers have already turned to all kinds of extreme solutions to deal with the disruptions in their production, including temporary halts of their production and shipping cars without certain systems, like start-stop, heated seats, and touch displays for infotainment.