Your wait for a new car may lengthen as the chip crisis worsens Business and Economy News

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The shortage of the semiconductor industry, which has already killed carmakers and consumer electronics companies, is getting even worse, complicating the global economy’s recovery from the coronavirus pandemic.

Chip delivery times, the gap between ordering a chip and receiving delivery, widened to 17 weeks in April, indicating that users are increasingly desperate to secure supply, according to a financial group investigation Susquehanna. This is the longest wait since the company began tracking data in 2017, in what it describes as a “danger zone”.

“All major product categories are up considerably,” Susquehanna analyst Chris Rolland wrote in a note Tuesday, citing delivery times for power management and analog chips, among others. “These were some of the biggest increases since we started tracking the data.”

The shortage of chips is spreading industry after industry, preventing companies from shipping products from cars to game consoles and refrigerators. Car manufacturers are now expected to lose $ 110 billion in sales this year, as Ford Motor Co., General Motors Co. and others have to slow down factories for lack of essential components. This outweighs economic growth and employment, as well as fears of panic management that could lead to distortions in the future.

The chip industry and its customers see delivery times as an indicator of the balance between supply and demand. The widening of the gap indicates that semiconductor buyers are more willing to commit to future supply to prevent recurring deficits. Analysts track these figures as a harbinger of hoarding that could lead to mass inventory buildup and a sudden drop in orders.

“High delivery times often force customers to‘ misbehave ’, including accumulating inventory, creating security material, and double ordering,” Rolland wrote. “It is possible that these trends have spurred a semiconductor industry into the early stages of overship above actual customer demand.”

The situation has been complicated by the resurgence of coronavirus cases in Taiwan, a key site for chip manufacturing. The country has closed schools, halted social gatherings and closed museums and public facilities. While companies and factories operate, the government may need to consider broader restrictions.

In the country is Taiwan Semiconductor Manufacturing Co., which is the most advanced chip manufacturer in the world and has Apple Inc. and Qualcomm Inc. among its numerous customers. Local manufacturers also produce less glamorous but equally critical chips, such as display controller chips that have been a particularly painful bottleneck for global production.

On Wednesday, Taiwan’s Centers for Disease Control raised the alert level across the island, extending Covid’s containment measures across the country. On the same day, the Water Resources Agency said Taiwan needs to tighten water saving measures because little rain has fallen during the traditional rainy season, aggravating a drought that has also threatened production.

TSMC said in a statement that it will continue to reduce water consumption and does not anticipate that the measures will affect its operations.

In his report, Rolland wrote that the current 17-week waiting level rose from the 16-week level and marks a fourth consecutive month of “considerable” expansion.

Delivery times for certain products increase sharply, even after months of shortages. Power management chips, for example, rose to 23.7 weeks in April, a waiting time about four weeks longer than a month earlier, according to Susquehanna. Industrial microcontrollers are ordering delivery deadlines to be extended by three weeks, some of the strongest increases Rolland has seen since it began tracking figures in 2017, he wrote.

Delays are usually worse for smaller manufacturers, as headset manufacturers face delivery deadlines of more than 52 weeks, according to people familiar with the supply chain. This has forced companies to redesign products, change priorities and, in at least one case, abandon a project altogether, said one person, asking not to be named because the information is not public.

Approximately 70% of companies that follow Rolland have expanding delivery times, compared to 20% who have seen delivery deadlines contracted. NXP Semiconductors NV, a major supplier of car chips, has delivery times of more than 22 weeks, up from the last twelve weeks of last year. STMicroelectronics NV, another key supplier of auto chips, saw delivery times increase by more than four weeks in April to more than 28 weeks.

These excessive increases may reflect excessive ordering from some customers, who may be concerned about the impact of the shortage on their business. Historically, companies have been able to cancel chip orders without penalty, although this has begun to change.

“As of January data, we have witnessed numerous JUMPS in LT reported,” Rolland wrote, referring to delivery deadlines. “While in previous years, a sole proprietorship typically moved its indicated LTs up and down only a few days in a given month, as of this year we have seen significant jumps in LTs that have skewed our data.”





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