Deloitte report predicts more microchip shortages in 2022

By Kate Birch
Global shortage of semiconductors for devices will continue in 2022, says Deloitte, but localisation of manufacturing should improve supply long-term

Global shortage of semiconductors for smartphones and vehicles will continue in 2022, says Deloitte, but localisation efforts should improve supply long-term

When the chips are down, it’s only a matter of time before they are up again. That’s been the story of the boom and bust semiconductor market for the past 25 years, but could the future be more stable?

From the Apple iPhone to Ford F-150, the global shortage of semiconductors has hit producers and consumers where it hurts – bringing production lines to a standstill and prices soaring as demand outstrips supply.

But all may not be lost for those longing for the latest iteration of their smartphone. The savvy technology, media and telecommunications (TMT) analysts at Deloitte have published their predictions for the sector in 2022 – and chips are definitely on the menu.

However, you may need to be patient – Deloitte Global predicts many chips will still be in short supply all through 2022. But take this news with a pinch of salt. The shortages will not be as severe as those seen during the COVID-19 crisis and will not affect all chips. 

According to Deloitte, delays were as much as 52 weeks for many semiconductors, hence those production lines grinding to a halt. So what caused the shortages, and how can we mitigate against the risk moving forward and break this boom-bust cycle?

In some ways, the pandemic proved the catalyst for an accelerated digital transformation – driving demand for laptops and other work-from-home technology.

Just to prove the significance of semiconductors in 2021, South Korean tech giant Samsung has just announced a reshuffle merging its market-leading smartphone division and consumer electronics division. That is in no small part down to the record performance of its chips and components division that in the latest quarterly results accounted for around three quarters of the company’s profit (a not insignificant figure given revenue was more than US$62bn).

It’s not just phones, laptops and cars that are driving soaring demand and prices – the rapid move to a more digital world. Yes, computer sales went up around 50% in 2021, but that also meant data centre chip demand went up 30% as cloud computing boomed. Artificial intelligence, a growing Internet of Things (IoT) and virtual healthcare solutions are all adding extra demand which supply has suffered.

Part of the supply problem has been down to an over-reliance on big manufacturers based in South Korea and Taiwan – accounting for more than 80% of global semiconductor production in 2020. Little wonder that the United States, European Union and China are taking matters into their own hands though localisation – making, or least assembling chips, on home soil.

Intel, for instance, is building two new chip-making facilities in Arizona at a cost of more than US$20bn.

It is hoped that this move away from cluster manufacturing, especially at a time when supply chain disruption is rife, may help to smooth those historic peaks and troughs of the boom and bust nature of the chip market.

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