According to the publication, companies have been “collecting” chips for a very long time, which continues the shortage in the market. Consumers no longer need them in these quantities.

Report details

The publication explains that in the past, just-in-time production has been the norm for companies that have ordered parts as close to the production date of their devices as possible to avoid overstock and reduce warehouse capacity and costs. However, during the pandemic, manufacturers stocked up on chips “just in case” as demand increased sharply and many manufacturers stopped working altogether. As a result, companies purchased chips in volumes exceeding real needs. This is how an artificial deficit appeared.

Now the situation is changing: semiconductor manufacturers have increased their production volumes, but their products have become useless as customers work on their stocks.

In the first quarter of 2022, chip stocks reached a record high among major electronics companies, according to Jefferies analyst Mark Lipatsis. The previous record for the first quarter had been broken more than two decades ago.

what is it now

• Some manufacturers already have, including American Micron Technology Inc. announced a decrease in microchip production.
• The collapse of the crypto market was also an additional blow.
• For example, Nvidia Corp, whose graphics chips are used for mining cryptocurrencies, may face another drop in price, as mining tokens are not as profitable as they used to be, and people not only stop buying new video cards, but also begin to somehow sell old ones. return the invested funds.
• Due to the crisis impacted by high inflation, the recent isolation due to COVID in China, and the war in Ukraine, people have also begun to update their smartphones less often, which means the demand for chips for them has also dropped, writes Reuters. Some factories are refitting lines to make automotive chips instead of radio frequency chips (such as those used in smartphones) that are still in high demand.