Strong ‘Evidence’ Chip Shortages to ‘Persist’ Into 2022: Fitch
Evidence is growing that semiconductor supply constraints will “persist longer than anticipated, intensifying and likely extending the current cyclical upturn into next year,” reported Fitch Ratings Thursday. Industry previously expected this to “dissipate” in 2021's second half “as foundries ramped…
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up production,” it said. But recent setbacks, including the Texas winter storms in February and Taiwan’s prolonged drought, “exacerbated” the supply constraints, said Fitch. Though the water supply in Taiwan is tight due to the lack of rainfall in the past year, Taiwan Semiconductor Manufacturing Co., the world's largest foundry, expects no impact to operations due to its water-conservation program, said executives on an earnings call last month. Foundries, including TSMC, are “aggressively adding capacity, but the acquisition and validation of chip making tools and production of finished semiconductors have historically taken roughly one year,” it said. Though that could result in rationing available supply among customers and higher prices for many products through 2021, “we expect structurally higher inventory through the chip supply chain over time, and more strategic engagement between larger customers and chipmakers to reduce risks related to future supply constraints,” it said.