DailyPost 2218
CHIPPING EVERYTHING
The complexities of the chip ecosystem and the way the ecosystem is evolving is literally chipping into everything inclusive of the chip industry, market leader inclusive. In the same breath we talk of share valuation rout, chip delivery time seeing the biggest decline in years, of overproduction, the impact of the Russia – Ukraine war and the latest and most lethal; the sanctions by the US. How this fast-moving chip ecosystem will impact whom; from the world’s leading manufacturer to the last consumer, there is nobody who can predict. A simple example will prove it all; the automatic cars in India are having delivery time of over 8 months on this count and that is just like a prediction, actual time no one knows.
Cisco is by now famed to have a delivery time of over a year. Politics and economy have all started moving around the chip fulcrum, with none being in control of anything. Everyone has become a bystander, dictated by day-to-day circumstance, change in policies and the state of war and peace the world over. What would be the role chip shortage play in the recession getting worse or the vice versa, how would the chip industry be impacted in the most detrimental manner courtesy recession. The cutting down of chip production can send most economies in a spin.
The rush for creating national capacities in this area may decrease in pace given, the current scenario. An era of unpredictability might be impending and that is the worst-case scenario for chip business. What will happen no one knows but currently the shortages in some areas / geographies seems to improve. The chip crisis been a depressingly familiar topic in the last 12 months, sees some alleviation now. As per Bloomberg lead times between a chip being ordered and when it is delivered – averaged 26.3 weeks in Sept from 27 weeks the previous month. In the pre-Covid times it was just 12.7 weeks in Oct 2019. All key product categories saw a wait time fall.
The impact of high-end auto manufacturing was huge at the height of the chip crisis. Also, anyone trying to buy a graphics card between mid to late 2020 would have a long tale of woes. Now we have another crazy scenario in a world of shortages; the oversupply of graphics card, SSD and RAM leading to price crash. Missing sales projections and layoffs are also becoming a part of the chip landscape. While PC supply chain is more like operating like the historic norm, but the server market continues to suffer due to semiconductor shortage. We live in tumultuous tech and economic times, nothing of this nature we have ever seen earlier and that too in the backdrop of a long just ended pandemic. Chips are a perfect example.
CHIPS ARE CHIPPING INTO STABILITY OF EVERYTHING.
Sanjay Sahay