Semiconductor Shortage Easing...

[2021 Mach 1]

The beginning of the great semi unwind...
Samsung Electronics Slashes Orders on Inflation and Inventory Worries: Report | Barron's (barrons.com)

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[Skye]

I can think of five factors, four significant, one, not so much.

1. The most obvious being inflation. Gas here is up 20% in the last 10 days. I've read several articles how inflation of commodity prices has greatly impacted EV pricing. Everyone has a limit where they just stop buying.

2. A lot of people were doing more WFH than ever before the last two years; they spent some of that time upgrading or replacing various devices. You can only buy so much until there's nothing left to buy.

3. Most recently, peoples' confidence in the global economies in-general has lessened. Things are going to start slowing down. People will begin losing jobs. Not a good time to load up on a lot of debt.

4. Supply chains have not gotten back to normal. But things seem to be improving. Businesses have less reasons to hoard. See contributing factors above.

5. It's Summer. People are outside, traveling, camping, generally spending time outdoors. From now until Fall, people aren't buying as many electronic items as they typically do.

 

[Bridgie]

I wouldn’t say we are out of the woods yet.. by a long way.

The component issues will continue into next year. It is not so much that the manufacturers are now not producing, but it’s the availability of those components for purchase.
Infineon, NXP, ST Micro, On Semi, Renasas to name a few..

Their wafer and material supplies are limited, so they have reduced production…. The global WIP and stock had been depleted like never before.

The Big OEM’s are working directly and are subsidizing the manufacturers due to all global distributors stock being depleted, so there is nothing out there on the open market, even with 1000% markups which we have seen. Until there is a massive increase in chip manufacture (which isn’t on the horizon), the OEM’s and Tier 1 suppliers will absorb all the stock, with high demand for prices. Resulting in a continued global shortage for some time to come.

The Ukraine war, global slowdown and economy will only feed the dragon..

article:
Ukraine makes more than 90% of the high-grade neon in gas-phase lasers used to make chips produced by U.S. semiconductor companies. The gas is a biproduct of Russian steel manufacturing which is purified in Ukraine, said market research company Techcet. Neon prices soared during the Russia-Ukraine conflict in 2014.

Meanwhile, Russia provides a third of the palladium metal used in sensors and memory products produced by U.S. companies. Russia is also a “crucial” source of C4F6 (hexafluorocyclobutene), which several U.S. suppliers buy and purify for advanced node logic device etching and advanced lithography processes for chip production,

 

[lugbolt]

the war in ukraine started feb 24, 2022

the chip shortage was going on long before. No doubt that the Russo-Ukraine war is having a big effect, but it didn't start there. From 2014-2020, there were plenty of chips available, cars on dealer lots, TV's in the stores, all ready to be sold. That is not the case now obviously but it begs the question, why? And why are the media blaming it on Russo-Ukraine war, and China? If China has a big part of it, why? Is it "really" a pandemic-driven deal, or is China secretly at war economically? The more that people think on this the more questions there will be, and a lot of them unanswered, or, answered such that we're being told what we think we want to hear.

 

[Bridgie]

I agree, political manipulation with world governments finding a way to affect the balance of economies..
So many opportunities to fuel the conspiracy theories and for each governing party to spin the facts.
Sanctions, treaties, trade agreements, duties and taxes are proving to be more crippling than missiles and munitions. A slow death…

 

[Skye]

I'm as good at predicting the future as anyone else.

One the demand side, see earlier comments.

On the supply side, I agree. In many areas, things are and continue to be bad. I don't see this improving until businesses and manufacturers see a long-term sustained commitment/opportunity to prepare for or build out increased capacity or production.

 

[Hack]

The thing I believe, but do not know 100%, is that many of the semiconductor chips used for automotive radar and related tasks are quite difficult to produce. The article quoted by the OP was saying that Samsung was going to produce fewer chips for TVs and phones because they are afraid sales are going to plummet.

The economy is very complex and there are many many working pieces. I think Samsung not making chips for TVs and mobile phones has little or nothing to do with automobile production. We can have high demand for cars but low demand for certain other products. However, if interests rates go up, I expect car sales and then values/prices to fall as well. People who buy with credit won't be able to afford high prices for cars anymore. In that way you could say a lot of this demand is interrelated. The demand for any and all higher cost products might decrease markedly if the cost of credit increases.

It also seems to me that car companies are stuck making what the law says they can build rather than making what consumers want in some cases. CAFE says make small vehicles with even smaller engines. If the consumers all want big cars with big engines, then the manufacturer is in a very tough position. In theory they can make exactly what their customers want, but then they won't meet fleet fuel economy standards.

Edit: my cynical nature also suspects that some people are predicting doom and gloom in order to make money on the stock market. They are hoping people will panic and sell certain things. All I can say is: buy low, sell high. I would recommend people avoid selling stocks if their value goes way down.

 

[ice445]

Personally I think the demand destruction created by the upcoming recession will chill things out substantially. All the industrial chemicals provided to the world by Russia though? That's going to be a fun ripple effect over the coming decade.

 

[Mspider]

I work in supply chain and one thing I can confirm is that overseas container shipping cost has dramatically came down from its peak. Although its still not at levels before the pandemic.

 

[2021 Mach 1]

Great debate everyone, thanks for the contributions.

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