A global chip shortage that has ravaged companies in the auto sector is spreading to other parts of the electronics industry, snarling supply chains for everything from game consoles to phones.
Ford, General Motors, Toyota, Volkswagen, and others have had to shut down production plants over the last quarter as they struggle to purchase parts and the chips packed inside them. The pipeline for chips used in cars was cleaned out by a consumer electronics boom in 2020. That has forced them to fight with consumer electronics giants like Apple for limited chip supplies.
The auto industry is not the only one struggling to buy enough chips for their products, though. Consumer electronics makers including Apple and Sony have blamed bottlenecks for slowing production of iPhones and Playstation 5s. As consumers have stocked up on PCs and other devices during the pandemic, the contract chip manufacturers have been flooded with orders.
Additionally, the chip industry is in a precarious position where any attempt to shift production to automakers could indirectly cause delays for consumer electronics makers running out of chips.
Most industry analysts believe the shortage will ease in the coming months as supply adapts to meet demand. But it could take longer for the sector to fully recover as demand hits record highs. Broadcom, which acts as a barometer for chip demand in broader technology industry, said that as of the first quarter, customers have already ordered 90% of its supply of chips for 2021.
Semiconductor makers are digging out of a very, very deep hole. Harlan Sur, industry analyst at JP Morgan, estimates that global supplies of chips are lagging 10% to 30% behind demand. He warned it could take nine to 12 months for supply levels to balance with demand. And it could be another three to six months before customer and distributor inventories are fully replenished.
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