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Overcapacities in the chip industry are possible as early as 2023

admin by admin
May 17, 2022
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Overcapacities in the chip industry are possible as early as 2023
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According to experts, the current shortage of chips could turn into overcapacity next year. The reason is the large-scale expansion of production, which will soon bear fruit, industry analyst Alan Priestley from IT market researcher Gartner told the German Press Agency. The industry has been investing in new factories since the first signs of bottlenecks at the beginning of the corona pandemic. “That’s why we will probably have overcapacity in 2023 or 2024,” Priestley predicted.

This oversupply will in turn be consumed over time by the increasing demand. This interplay is in itself typical of the chip industry, Priestley stressed. “As soon as demand and supply are in balance, investments are made to have capacities for the next demand surge.“ However, the current chip crisis has been so severe because not enough has been invested in expansion in some areas – and at the same time, demand has skyrocketed due to increased work and learning in the corona pandemic.

The expansion of capacities is also associated with risks for suppliers, as the production lines are not flexible. “If I build a factory for chips with a structure width of seven nanometers, it will not be possible to change it to five nanometers without much effort.“ And it’s not as easy as in other areas to just let production rest. That’s why companies have to plan their expansion decisions particularly proactively – and new capacities in one area are not necessarily helpful for other parts of the industry.

The chip bottlenecks caused delivery problems for computers, cars, household appliances and also electronics such as tablets, among other things.

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