Situation Predicted to Start Improving in 2nd Half of 2021

The ongoing semiconductor shortage is forecast to continue throughout the first half of 2021.

The ongoing semiconductor shortage in major industries such as automobiles, TVs, and smartphones will continue throughout the first half of 2021, analysts forecast. They say that supply and demand will be balanced little by little starting from the second half of this year when major semiconductor manufacturers' expansion comes into effect, and will be stabilized in 2022.

Demand for semiconductors for PCs, mobile devices, automobiles, and wireless communications began to surge from the third quarter of 2020, according to market research company Omdia on Feb. 14. Demand inflated fastest in the consumer electronics and automotive sectors.

In fact, in the third quarter of 2020, global sales of automotive semiconductors fell 5.6 percent on year to US$9.9 billion, but surged 28.3 percent from the previous quarter. This is because major automakers’ production fell due to the COVID-19 pandemic until the second quarter of 2020, but demand for automobiles soared due to a recovery in consumer confidence in the third quarter.


The same goes for TVs and home appliances. Semiconductor sales for global consumer electronics reached US$12.1 billion in the third quarter of 2020, up 18.4 percent from the same period in 2020 and 25.2 percent from the previous quarter, Omdia said. Sales of TVs and home appliances spiked sharply since the third quarter when demand suppressed by the COVID-19 pandemic began to shoot up.

The problem is that the supply shortage was triggered by semiconductor companies which had failed to predict demand from major corporate customers producing home appliances, mobile devices, and automobiles. Chipmakers are unable to meet such rapidly growing global demand.

"The lead time (time from an order to delivery) has more than doubled from one to two months to three to four months based on 8-inch wafers," Omdia said in a report. "The extended lead time is making the supply shortage worse."

Foundry companies raised prices by 20 percent to deal with rapidly growing demand, but even the action was not enough to resolve supply shortages in major finished product industries such as automobiles and smartphones.

Experts believe that shortages of semiconductors will eventually lead to price hikes for consumers. The case in point is the display drive IC (DDIC) market. Due to a lack of DDIC supply which started from the fourth quarter of 2020, prices of display products will increase by 20 to 30 percent by the first quarter of 2021, according to Omdia. In particular, Omdia points out that rising LCD panel prices are adding pressure to TV supply.

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