Chipmakers are producing more units than ever, glut concerns rising

Gandalf_The_Grey

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Some are wondering if companies' heightened production efforts will result in oversupply.

What you need to know
  • There's a global semiconductor shortage going on.
  • The nine leading chipmakers have amassed a record-breaking inventory to fight shortages.
  • There is a risk that too much production could lead to an eventual glut.
The global semiconductor shortage has been causing kerfuffles in all sorts of sectors, from automobiles to the best gaming laptops. Production pipelines have been slowed and stalled thanks to a lack of chips. And companies are working hard to fix that.

In a report by Nikkei Asia, it's tallied that the nine leading chipmakers globally have amassed an inventory worth $64.7 billion as of June. That record-high figure is a result of production efforts being escalated to combat the worldwide shortage, achieved even as many Southeast Asian chipmakers have suspended operations due to COVID-19 and its consequences.

These efforts are not without reason. NVIDIA expects shortages to last through 2022. Other companies have their sights set on 2023. Governments around the world are bustling to accelerate semiconductor operations, and China and the U.S. are having something of a tech war with each other over the topic.

However, despite all the discourse describing the situation as doom and gloom, there are those who are seeing supply chains return to some semblance of normalcy, raising concerns that too much production ramping could lead to an overstocking glut in the future. For example, SK Hynix and Micron Technology reported steady inventory declines, which goes against the flying-off-the-shelves narrative other companies are operating within.

With that said, even if some companies are seeing semiconductor supply problems disappearing, consumers are still suffering across the board at the far end of the pipeline. Just ask anyone who's been trying to get their hands on the best graphics cards and has visited a Best Buy recently.
 
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