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Chip Shortage Will Disappear Soon, An Analyst Says

Qualcomm Snapdragon 765 5G Chip In Hand 01
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The vice president and senior credit officer at Moody’s, Lillian Li, says that the global chip shortage will soon disappear, Fortune reports. The chip shortage has affected numerous industries, including consumer electronics and the automotive industry. The more it lasts, the more it hurts industries. But it seems that the influential countries in the semiconductor market are trying to solve this problem quickly.

According to Li, “All the world’s advanced economies, including the U.S., the E.U., South Korea, and China have set out plans to advance capacity in the domestic semiconductor industry.”

China is currently the largest importer of semiconductors in the world. Recent U.S. sanctions have prompted Chinese Communist Party officials to invest heavily in domestic production. China is now gaining more market share.

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Li believes that developing domestic semiconductors has some pros and cons for China. “The advantages, such as avoiding geopolitical insecurities, are very apparent. But the risk of spurring overcapacity remains.” Li added that China’s investment in semiconductors increased 407% on an annual basis. The more counties invest, the sooner chip shortage would disappear.

To date, there have been many contradictory talks about when the chip shortage ends. Glenn O’Donnell, a vice president research director at advisory firm Forrester, has recently said that the chip shortage could last until 2023. As per the recent moves for supporting the industry, maybe this is the closest prediction to reality.

Moreover, Intel CEO Pat Gelsinger has previously said that this could worsen if the United States and China can not develop a solution to improve relations and resolve trade disputes. Intel also wants to spend $20 billion on building two new semiconductor factories in the United States.

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The semiconductor is a new commercial battlefield between west and east

Officials in influential countries are aware of the importance of the semiconductor market. They know that a country that loses this market has lost an important trump card in politics and economics.

Of course, the United States also has plans to support the semiconductor industry in the country. Dates back to June 2021, the U.S. Senate passed a bill to support the semiconductors with a $190 billion fund. Almost $52 billion is allocated to manufacturers to increase production.

Semiconductor warfare is not just between the United States and China. The European Union has set aside about $ 160 billion for the semiconductor industry. E.U. officials hope to increase their market share from the current 20% to 30% by 2030.

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South Korea also plans to spend $450 billion on the semiconductor industry to consolidate its dominance in the market over the next decade. Samsung will play a key role in this plan.