Exploding demand across a variety of goods from electronics to autos is getting short-circuited at the source, as a shortage of semiconductors grips businesses looking to meet orders.
The Covid-19 pandemic brought with it a shift in the way Americans live, as a move to at-home work and leisure raised the need for electronics, and a surge in cash to consumers generated a pickup in orders for cars and other chip-powered products.
A pervasive shortage has been driven by a multitude of factors that extend beyond demand.
For one, a March fire at the Renesas plant near Tokyo dented supplies, with full capacity not expected to be restored until the end of May. Earlier in the year, weather-related outages at Texas manufacturers including Samsung and NXP Semiconductor also caused supply problems. Looking further out, some worry that tensions between China and Taiwan could impact the industry negatively as well.
Taken together, the issue with the chips so essential and ubiquitous in everyday life is causing substantial consternation among corporate leaders.
The semiconductor issue has been mentioned dozens of times in conference calls that executives have held with analysts since first-quarter earnings began in early April.
While the accounts have been similar of order backlogs and concern for what it will mean for revenues, the prognoses differ. Unofficial consensus is that the delays could last six to 12 months. Some executives see the problem as a serious threat to near-term profitability while others viewed it as a good problem to have – demand outstripping supply is a positive sign for future growth.
All of those who talked about the issue, though, said it is front of mind for a variety of industries.