As the year comes to a close, semiconductor companies are looking forward to what’s ahead for the electronics supply chain. Though no one knew what to expect this time of year, there’s no doubt that the impact of the pandemic will join us in 2022. However, despite the many setbacks faced, there are more and more bright spots up ahead. Read our industry update to learn about the expected growth, medical components, improving inventory, and more.
Global electronics supply chain Shortages Continue Into 2022
Many industries, from automotive to medical, have faced lower production. This resulted from the start of the pandemic and increased demand for products. As much as everyone wants a clean slate at the beginning of a new year, there’s no question that the global electronics supply chain shortages will continue well into 2022. While this is not ideal, there are a few bright spots ahead for 2022. According to Gokul Hariharan from JPMorgan, many expect more supplies to become available. Experts project this to take place mid-year. Though shortages will persist for specific industries and parts, many welcome the improvement after months of negative news.
Automotive Semiconductor Inventory Improves
The automotive industry took a heavy blow due to the unprecedented increased demand and supply chain issues at the start of the pandemic. Since then, production was cut, some automotive retail moved online, and other parts of the industry were changed forever. Thankfully, some aspects seem to be recovering. Five major automotive semiconductor vendors were inventoried. The results revealed an increase in inventory, suggesting the first gain in 2021. This points to potential improvement coming for the automotive industry and some possible electronics supply chain relief from the hard hits of the pandemic.
Semiconductor Companies Hit Record High Sales for 2021
Though electronic supply chain shortages are abundant, this hasn’t prevented an increase as global semiconductor sales hit a record high for 2021. The Semiconductor Industry Association announced that sales increased 24.0% from October 2020 to 2021. This was an increase from $39.4 billion in sales to $48.8 billion. Despite shortages, semiconductors have been in more demand than ever, and new investments are being made in the industry. All major regional markets saw year-to-year and month-to-month sales growth. For year-to-year growth this broke down to 29.2% for the Americas, 27.3% for Europe, 23.7% for Japan, 22.6 for Asia Pacific/All Other, and 21.2% for China. At this point, sales are predicted to increase another 9% in 2022, and demand is expected to stay high next year as well.
It’s an understatement to say that the semiconductor industry has dealt with many twists and turns. Despite unparalleled electronics supply chain shortages on top of record demand, it seems relief is in the future. While 2022 won’t bring an end to the shortages, it will provide an opportunity for industries to apply the lessons they’ve learned and gives way for new innovation. With record sales, improvement for the automotive industry, and new investments, there is plenty to celebrate and look forward to. While the months after the start of the pandemic have been anything but easy, we are proud of the continued dedication and perseverance of our team. They ensure we are ready to navigate any situation and continue to deliver exceptional outcomes to our business partners. For more information on how Velocity can help you as you step into the new year, submit an RFQ today!