The gap between ordering a chip and taking delivery increased to 17 weeks in April, according to one piece of research.
Shortages in the semiconductor industry, which have already slammed automakers and consumer electronics companies, are getting even worse, complicating the global economy’s recovery from the coronavirus pandemic.
Chip lead times, the gap between ordering a chip and taking delivery, increased to 17 weeks in April, indicating users are getting more desperate to secure supply, according to research by Susquehanna Financial Group. That is the longest wait since the firm began tracking the data in 2017, in what it describes as the “danger zone.”
Graph showing wait time between ordering and getting a chip. (Graph: Bloomberg)Graph showing wait time between ordering and getting a chip.
“All major product categories up considerably,” Susquehanna analyst Chris Rolland wrote in a note Tuesday, citing power management and analog chip lead times among others. “These were some of the largest increases since we started tracking the data.”
Chip shortages are rippling through industry after industry, preventing companies from shipping products from cars to game consoles and refrigerators. Automakers are now expected to lose out on $110 billion in sales this year, as Ford Motor Co., General Motors Co., and others have to idle factories for lack of essential components. That’s undercutting economic growth and employment, as well as raising fears of panic order that may lead to distortions in the future.
The chip industry and its customers watch lead times as an indicator of the balance between supply and demand. A lengthening of the gap indicates that buyers of semiconductors are more willing to commit to future supply to avoid a recurrence of shortfalls. Analysts track these numbers as a harbinger of hoarding that can lead to the accumulation of too much inventory and sudden declines in orders.
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