The future of automotive chips cannot be predicted

June 6, 2022

Latest company case about The future of automotive chips cannot be predicted

At first, predicting when the car chip shortage will end seems easy, with analysts estimating that pre-pandemic levels will be reached by 2021.
In other words, it seems like the tight supply of semiconductors shouldn't last that long, as everyone expects production to be in line with demand within a few months.

But that apparently didn't happen, so industry experts and analysts then predicted that the shortage would end early next year. This means that chip inventories were scheduled to recover in January 2022, but this didn't happen again, and the world ended up in a shortage as before.



It's June 2022, and the chip supply tightness still exists in some industries, still causes so many problems, and still doesn't show any credible signs that it's going to go away.

At this point, however, all the predictions boil down to two different scenarios. One is the good news that everyone is looking forward to, while the other is a prediction that no one wants to accept.

Let's start with optimistic predictions. A series of car companies seem to believe that the chip shortage will gradually improve in the second half of the year, eventually leading to a full recovery in early 2023. This means that by the end of 2022, car production should slowly return to normal, and by this time next year, the waiting time should be greatly shortened.


U.S.-based chipmaker Qualcomm also appears to be supporting the scenario, though the company's CEO recently said the recovery in some industries would be more difficult than others. This means that while some companies will see an improvement in chip inventories, others will still have to wait until 2024 to stop struggling with limited semiconductor supply.

Next, let's talk about the worst part.

Intel is one of the top players in the chip industry, and companies you can really trust in anticipating the end of a crisis don't seem to think that pre-pandemic levels are anywhere on the radar.


In a recent statement, the company's CEO stressed that the chip shortage won't end before 2024. He even offered additional reasons to support his claims.

First, while more and more chipmakers are investing in ramping up capacity, it's unlikely to ramp up production overnight. The whole process will take time, so even if these companies eventually make more chips, the market will still not notice any substantial improvement by 2024.


Then all these companies trying to ramp up capacity are struggling to solve another problem. This is the lack of machines needed to actually produce chips, as the world is now battling other material shortages caused by factors such as China's blockade and the war in Ukraine. For example, the helium portion used in lasers used in chip production is supplied by Ukraine, which also faces major disruptions in light of military incursions.

At the end of the day, it's clear that guessing when the chip shortage will end is a simple guess that is impossible to be accurate in the long run. At the end of the day, this is all unpredictable.





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