Here's what analysts expect from chip shortages in 2022

An analyst from GlobalData says that we can expect the chip shortage to continue in some industries this year, but it won't be as bad as previous years.
Written by Allison Murray, Staff Writer

The global shortage of semiconductors and critical minerals that play a part in much of our technology will still be a nuisance in 2022, an analyst says, for some industries more than others.

According to a recent report from GlobalData, a leading data and analytics company, the semiconductor (or chip) shortage we have seen in the past two years will be an issue for industries thanks to new variants of COVID-19. Most notably, the shortage will affect industry sectors like 5G, pharmaceuticals, and batteries.

The report, titled "Tech, Media, and Telecoms Predictions 2022," details that the strife between the US and China over the supply chain of chips and minerals will remain heated for most of this year but will begin to improve in the latter half of 2022. Daniel Clarke, an analyst on the Thematic Research Team at GlobalData, told ZDNet that consumers could expect the automotive and tech industries to be the most impacted.

"For the automotive sector, it means that new car sales will not be as high as automakers would like, simply due to production issues," he said. "For the tech sector, smartphones and gaming consoles will continue to be affected. Consumers will be impacted by rising prices or a general lack of widespread availability. This is because tech companies will either decide to absorb the cost internally or pass the cost onto the consumers."

We've already felt the repercussions of the chip shortage in 2021, especially in the tech sector. For example, Apple cut the production of the iPhone 13 by 10% late last year. However, Clarke added that the pressure on the tech industry in supply chains would be less than last year.

"The emergence of a new variant, which could lead to countries locking down for a short period could put further unexpected pressures on the shortage in 2022," he said. "Although, in this hypothetical scenario, the demand side pressures created by working from home would not be as disruptive, as most of those working from home will have already bought consumer electronics equipment in the previous lockdowns. "

Other reports echo GlobalData's study that while the supply chain issues will remain this year, they won't be as harsh as what we've already dealt with. A November report from Deloitte points to an even more grim outcome, in which consumers would still be waiting 10 to 20 weeks for chips by the end of 2022.

Clarke said that, ultimately, the key to solving the chip shortage is a bigger investment in chip manufacturing from Western governments. These investments would include exploration, mining, and processing critical minerals to diversify supply.

"Subsidizing chipmaking companies to ensure that domestic chipmakers do not outsource their manufacturing abroad will be a key focus of Western governments," Clarke said. "Cost-competitiveness is key for chipmakers."

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