Is the Semiconductor Shortage Finally Over?

 January 23rd, 2023 |   By Area51 Electronics  |   0 Comments

Can the semiconductor industry finally breathe a sigh of relief? The answer to that question is yes. For now. After two tumultuous years, the chip shortage crisis is now starting to ease, as evident with reduced demand and spending. The Semiconductor Industry Association (SIA) recently reported that global semiconductor industry sales were $45.5 billion during November 2022, a decrease of 2.9%, compared to the October 2022 total of $46.9 billion, and 9.2% less than the November 2021 total of $50 billion.

Additionally, a recent World Semiconductor Trade Statistics Organization (WSTS) forecast states that annual global sales increased 4.4% last year and will decrease 4.1% in 2023.

An Improved Outlook for 2023 and Beyond

Industry experts have an overall optimistic outlook for 2023 and predict that the semiconductor shortage will continue to improve. In a recent CNBC article, Peter Voser of Swedish tech and engineering giant, ABB, stated that the chip shortage will eventually be “sorted out.”

And a recent survey conducted by the Global Semiconductor Alliance (GSA) in partnership with global professional network KPMG, reports that 65% of industry executives think the semiconductor supply shortage will ease in 2023, and 15% believe that supply and demand is already in balance for most products, while only 20% expect the shortage will last into 2024 and beyond.

One reason for the industry’s renewed optimism stems from continued improvements on building more fabs in the U.S., followed by the passage of the CHIPS Act – which is expected to help revitalize domestic manufacturing and strengthen American supply chains.

Another reason for the improved outlook is the slowing of economic activity as consumers grappled with the rising cost of living. This in turn resulted in a reduced demand for high-priced consumer goods equipped with chips. The reduced demand allows for the industry to level and balance itself – a way to right the ship.

While some experts predict that 2023 is the year for the end of the chip shortage, other experts see a rosier outlook in 2024. According to Accenture, 76% of semiconductors expect the industry’s supply chain woes to ease by 2024. But the company also stated that companies need to be prepared to withstand other market pressures by focusing on investments that will help drive future growth.

Be Ready

While things are looking up for the semiconductor industry, it’s good to always be ready. Better to be proactive than reactive. That’s why it’s critical to partner with an electronic components distributor that can help you navigate the global supply chain – through good times and bad. Area51 Electronics makes that possible.

As a diverse authorized and independent electronic component distributor, Area51 Electronics has access to a vast portfolio of authorized lines, our own inventory, and other supply chain sourcing services. Working with a distributor with a strong, diverse portfolio is critical to building long-term resilience and success.

 

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