The Chip Shortage Remains Widespread
Chip Glut Predictions
Whether car, computer, or video game, semiconductor chips are used in a lot of different products. The recent shortage has led to price spikes and delivery delays.
Recent earnings reports from NVIDIA (NVDA) and Micron Technology (MU) suggested the crisis may be abating, as they forecasted a supply glut following ramped-up production. But, as they say, the devil is in the details. For consumers looking for price-relief or delivery of that coveted EV, the wait is unlikely to end anytime soon. For now, a potential chip glut is likely to be limited to just one industry: personal computers.
As the emphasis on remote school and work unwinds, the demand for PCs and the chips that provide their functionality have fallen. That said, other chip-reliant products and industries are still scrambling to get the components they need.
Cisco (CSCO), which creates the machinery that powers internet networks, can’t get the components it needs. The company says it doesn’t see the issue being resolved by its fiscal year end in July 2023. The company’s CFO, Scott Herren, is optimistic that in time some factories will shift production from PC chips to build needed components. Analog Devices (ADI) is a beneficiary of the chip shortage. Its revenue is growing along with its backlog of orders.
Chips for the Chip-Maker
A further indication that the anticipated chip glut may be a ways off is the current status of Applied Materials (AMAT), which provides equipment and software used to manufacture semiconductor chips. This week, company executives said they’re having difficulty fulfilling incoming orders. The reason? They can’t get enough chips themselves. CEO Gary Dickerson anticipates the shortage will continue for months.
Unless you’re in the market for a PC, the chip shortage will continue to be a thing. By now you likely already know the result: ongoing delivery delays and high prices for select products.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.