Worldwide chip shortage expected to last into next year

A global shortage of semiconductors has pushed chip stocks to record highs, and analysts expect that chips will continue to be in short supply at least through the end of the year as COVID-19 pushes the world further into the digital realm and the industry struggles to keep up with demand.Analysts believe there could be more gains ahead, though, as demand sends prices higher and boosts companies throughout the semiconductor space.

The cause seems to be a combination of increased demand as people scooped up electronics during the COVID-19 pandemic, limited manufacturing capacity to meet that demand, and the U.S.-China trade war.

Even as stock fundamentals appear stretched thin, Sur said “we believe semi companies are shipping 10% to 30% BELOW current demand levels and it will take at least 3-4 quarters for supply to catch up with demand and then another 1-2 quarters for inventories at customers/distribution channels to be replenished back to normal levels.”

“We’ve heard from countless component suppliers and distributors about elevated book-to-bill levels and growing backlog, typically a ‘double-ordering’ red
flag,”

... a quick look inside any copier will reveal many microchips and processors that are required to make the product work.  A shortage of one $0.25 chip prevents a critical board from being produced and a copier from being assembled.