The chip shortage could turn into a chip oversupply by 2023 states analyst firm

[Lightwreather]

Summary

The chip shortage could turn into a chip oversupply by 2023, according to analyst firm IDC.

Quotes

Quote

The IDC report (via The Register) notes that it expects the semiconductor industry to see "normalisation and balance by the middle of 2022, with a potential for overcapacity in 2023 as larger scale capacity expansions begin to come online towards the end of 2022."

Manufacturing capacity is also said to be already maxed out for 2021, meaning every fab is booked up for the remainder of the year. Though it's reportedly looking a little better for fabless companies (i.e. AMD, Nvidia) to get hold of the chips they need.

Although with that comes warning of material shortages and slowdowns to back-end manufacturing (all the processes needing to be done to the wafer after it's been produced).

Manufacturers will be cautious to going overboard in increasing supply, though. They're selling absolutely everything they can build right now and overdelivering on the supply front could leave them swimming in leftover chips or having to drop prices. That actually happened to Nvidia once, and it did not end well. 

 

 

My thoughts

Well, this should be great news right? Unfortunately it means more waiting. 2022/2023 seems like a long way off from now. But we can always hope. And moving from a Chip shortage to that of an oversupply would be quite a change of pace, soon we'd probably be getting price cuts and cheap may no longer mean at MSRP but below it. But we'll have to wait and see how this pans out.

Sources

PCGamer

IDC
The register

[adarw]

i think probably not, just like gold and diamonds if they have more that it would make the prices go down they would rather keep it, so the chips will be destroyed... just probably

[adarw]

14 minutes ago, J-from-Nucleon said:

swimming in leftover chips or having to drop prices. That actually happened to Nvidia once, and it did not end well. 

 

when was this?

[Dutch_Master]

Their predictions are based on current and projected demand. My prediction is that demand will rise beyond that, so the "oversupply" won't actually exist

[TOMPPIX]

If there is a demand for the things a company make, and they have too much of it and destroy it to keep the prices high, that shit should be illegal.

[adarw]

1 minute ago, TOMPPIX said:

If there is a demand for the things a company make, and they destroy it to keep the prices high, that shit should be illegal.

why? its their product/property they can do anything they want with it.

[poochyena]

31 minutes ago, adarw said:

i think probably not, just like gold and diamonds if they have more that it would make the prices go down they would rather keep it, so the chips will be destroyed... just probably

except chips have actual real value. There would be literally no reason to destroy any modern chips.

[adarw]

Just now, poochyena said:

except chips have actual real value. There would be literally no reason to destroy any modern chips.

oh true, they can just keep the prices up and have a lot of chips. hmm, interesting.

[TOMPPIX]

2 hours ago, adarw said:

why? its their product/property they can do anything they want with it.

Same reason why burning cash is illegal.

[LAwLz]

3 hours ago, adarw said:

i think probably not, just like gold and diamonds if they have more that it would make the prices go down they would rather keep it, so the chips will be destroyed... just probably

That makes no sense... Also, what do you mean "just like gold and diamonds"? Do you think gold and diamond price are being destroyed just to keep prices high? Where did you get that weird conspiracy theory from?

 

 

3 hours ago, Dutch_Master said:

Their predictions are based on current and projected demand. My prediction is that demand will rise beyond that, so the "oversupply" won't actually exist

And you base that on what exactly?

[porina]

We've historically seen cycles in over/under supply of ram, but less so other areas. Ram is a bit different from CPUs or GPUs though, in that it is more of a commodity. Standards based DDR is pretty much the same regardless who it comes from, so there is real market competition there.

 

With semiconductors, if demand is below capacity, they simply don't use that extra capacity. Is that such a mind blowing concept? It makes little sense to make stuff if there is no market for it. Over-supply would not be the problem for the fabs, more so for the people ordering from the fabs. In a constraint, you want to make sure you get your orders in and accepted. Maybe even over-state your needs in the hopes that if you get allocated less, you still get more share. If that swings to fab over-capacity, you can afford to order less with better expectation of putting in orders to match demand as needed.

 

Destruction/recycling of product before sale is usually a last resort if there is no realistic way to get value from the product. For example, it may become obsolete or for legal reasons. By obsolete, I don't just mean last gen but still functional. I mean, standards have moved on and the old ones are not usable any more. Storing large quantity of product in warehouse with slow sales has an ongoing cost associated with it. At some point storage costs can outweigh ongoing profit and it is time to bin it and move onto more useful products. Also, managing products has a cost associated with it.

[dizmo]

Unlikely to see drops in prices. It's chips, not the product itself. We'll see a leveling out of prices back to what they should be, and that's it. It's not like there's going to be oversupply of specific things like GPUs and CPUs. 

 

8 hours ago, adarw said:

i think probably not, just like gold and diamonds if they have more that it would make the prices go down they would rather keep it, so the chips will be destroyed... just probably

No. No they won't. They didn't do that with RAM oversupply, they wouldn't do it with this. I have a feeling you're trying to draw parallels with the fashion industry, but they do it to keep their brand prestige, not something any tech company is looking to do (aside from perhaps Apple). 

[Dutch_Master]

6 hours ago, LAwLz said:

And you base that on what exactly?

Nothing in particular, just 30-odd years in Electronics 'n stuff   Yeah, I was around when a 486 with ISA bus was actually a thing (and bl**dy expensive!)   (OK, ok, showing my age here )

[poochyena]

7 hours ago, TOMPPIX said:

Same reason why burning cash is illegal.

because its government property? huh?

[Tan3l6]

I think the world is in the verge of a quite big financial crisis.

Also who knows what might happen in two years.

[StDragon]

10 hours ago, LAwLz said:

That makes no sense... Also, what do you mean "just like gold and diamonds"? Do you think gold and diamond price are being destroyed just to keep prices high? Where did you get that weird conspiracy theory from?

It's a bad analogy to begin with. De Beers has a monopoly on the rocks that have high ratings in the four Cs, so they control the supply (profit in scarcity, not volume) The rest is cheap fragments used for industrial purposes.

[Donut417]

 

19 hours ago, J-from-Nucleon said:

oon we'd probably be getting price cuts and cheap may no longer mean at MSRP but below it. But we'll have to wait and see how this pans out.

I dont see price cuts being that drastic. TSMC raised the cost of chips, they have to pay for the fab(s) some how. I think part of the reason this is happening is because Intel did state they would start opening up their fabs to produce chips for others. Remember up till this point, Intel pretty much produced their own shit and no one else. Further more the supply chain is still jacked up. Its getting better, today my boss said we are finally getting containers in from China after months and months of waiting. But still, its taking longer to ship things and its costing more money. Those costs are always thrown on to the customer. While prices might fall, it dont see them falling below MSRP. 

[Kisai]

On 9/20/2021 at 9:27 PM, J-from-Nucleon said:

Summary

The chip shortage could turn into a chip oversupply by 2023, according to analyst firm IDC.

Quotes

 

My thoughts

Well, this should be great news right? Unfortunately it means more waiting. 2022/2023 seems like a long way off from now. But we can always hope. And moving from a Chip shortage to that of an oversupply would be quite a change of pace, soon we'd probably be getting price cuts and cheap may no longer mean at MSRP but below it. But we'll have to wait and see how this pans out.

Sources

PCGamer

IDC
The register

It probably will result in an over-supply of certain chips (likely RAM and Flash chips) but not CPU/GPU's since those always have to be built on a bleeding-edge process to be marketable.

[Monkey Dust]

19 hours ago, Tan3l6 said:

I think the world is in the verge of a quite big financial crisis.

Also who knows what might happen in two years.

You may well be right, things are looking pretty precarious right now. But there is such a pent-up demand for all kinds of things, I can't see a price crushing surplus by 2023.