Semiconductor chip shortage could extend through 2022

The ongoing shortage of semiconductor chips, which is undermining major industries, is expected to extend into next year and potentially beyond, Matt Murphy, CEO of chip maker Marvell Technology, has told CNBC.

“Right now, every single end market for semiconductors is up simultaneously; I’ve been in this industry 27 years, I’ve never seen that happen,” Murphy said, adding: “If it stays business as usual, and everything’s up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year.”

According to Murphy, the shortage may be addressed as the demand for certain products requiring microchips finally falls.

“I think there’s no way, from my point of view, that every segment of the electronics industry stays up and to the right, ripping demand for another 12 months; it doesn’t make any sense,” Murphy said. “I think something’s got to give. And when it gives that should free up the capacity in aggregate for the rest of the industry to go consume and ultimately align it with the true demand.”

Murphy says the slowing of demand could come from areas such as the personal computer market.

The growing demand for consumer electronics during the Covid-19 pandemic has worsened the scarcity of the microchips used in vehicles, stalling production at factories worldwide and pushing auto prices ever higher. Semiconductor chips are vital components in new cars and are widely used in infotainment systems, as well as in basic parts such as power steering and brakes. An average vehicle may have hundreds of semiconductor chips.

Automakers across the globe have been signaling massive cuts in earnings this year because of the chip shortage. General Motors said on Friday its US vehicle sales plunged by more than 30% during the third quarter in annual terms, due to the supply issues.

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