More Demand and Price Increases as the shortage continues
It’s safe to say that most are aware of the increased demand for electronics due to supply chain shortages in the semiconductor industry. Additionally, many experienced consequences of, or at least know about, the supply chain shortages. The causes for disruptions in the supply chain include everything from surges in Covid-19 to fires and cold temperatures. From price increases to shutdowns, the semiconductor industry continues to adjust, in spite of the unique challenges of the year.
Semiconductor Manufacturers: Price Increases Due to Supply Chain Shortages
As a result of increased demand and supply chain shortages, many in the semiconductor industry are increasing pricing. During the height of the pandemic, semiconductor demand certainly reached an all-time high. Meanwhile, manufacturers have struggled to meet the demand, despite their best efforts. Ultimately, the increased demand coupled with the shortage has led manufacturers such as NXP Semiconductors and Renesas Electronics to raise prices. The higher pricing has led to many experiencing sticker shock when shopping for everyday products. Overall, many believe the automotive industry has been hit the hardest by the shortage. However, other industry segments such as industrial machinery and IT hardware have also struggled.
How is the Pandemic affecting India, Malaysia, Thailand, Taiwan and Japan?
The pandemic is sending waves of challenges for the semiconductor industry in many countries. In India, Thailand, and other countries, prices are increasing due to limited supply resulting from supply chain shortages. Malaysia’s surges in virus cases have resulted in a lockdown from June 1st to June 14th. As a result, many expect another slowdown in the supply chain. In March 2021, one of the leading semiconductor manufacturers in Japan experienced a fire, again sending ripples through the global supply chain. On the other hand, Taiwan Semiconductor Manufacturing Company actually saw an increase in revenue in the first quarter. The revenue from the 7, 12, and 16-nanometer semiconductors rose at a steady pace. Though many are anxious for the end of the shortage, the timing of the end is uncertain.
Supply Deficit Limits 2021 Semiconductor Growth
Since the start of the pandemic in 2020, semiconductor supply has seen global shortages that have shocked even the veterans in the industry. Many are left to speculate on when the business process may go back to normal, and when products and services will once again be available in a timely manner. Currently, it’s projected that the supply chain shortage may take at least two years to sort out. Predicting the future market is a difficult task due to the aftershock of the pandemic. Although the deficit in supplies is projected to limit 2021 growth for the industry, demand and annual sales are continuing to increase. Annual sales are projected to increase 19.7% in 2021, 8.8% in 2022.
In conclusion, the effects of natural disasters, customer demand, supply chain shortages, and other issues will continue to impact the industry goods and services for the foreseeable future. With price increases and limited growth, the industry will continue to feel the harsh effects for quite some time. In the meantime, many manufacturers are working to maintain a competitive advantage to get ahead of the supply chain issues. Despite the many setbacks, the industry continues to respond with optimism and resilience.