Gartner Forecasts Chip Shortages Will Stretch Well Into 2022

May 14, 2021 by Dave Haynes

The research and analysis firm Gartner is forecasting that the worldwide semiconductor shortage that is hitting most tech industries, including digital signage, will persist throughout 2021 and not return to more normal levels until Q2 2022.

“The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types in 2021. Foundries are increasing wafer prices, and in turn, chip companies are increasing device prices,” said Kanishka Chauhan, principal research analyst at Gartner, in a news release.

Says Gartner:

The chip shortage started primarily with devices, such as power management, display devices and microcontrollers, fabricated on legacy nodes at 8-inch foundry fabs, which have a limited supply. The shortage has now extended to other devices, and there are capacity constraints and shortages for substrates, wire bonding, passives, materials, and testing, all of which are parts of the supply chain beyond chip fabs. These are highly commoditized industries with minimal flexibility/capacity to invest aggressively on a short notice.

Across most categories, device shortages are expected to be pushed out until the second quarter of 2022, while substrate capacity constraints could potentially extend to fourth quarter of 2022. 

Gartner Index of Inventory Semiconductor Supply Chain Tracking – Projected Worldwide Semiconductor Inventory Index Movement, 2021-2022

Note: 1Q21 is a modelled estimate and is subject to change based on actual financials reported by vendors in 2Q21. The index bar for 2Q21 to 4Q22 is only a directional estimate. Source: Gartner (May 2021)

Gartner analysts recommend that OEMs dependent directly or indirectly on semiconductors take four key actions to mitigate risk and revenue loss during the global chip shortage:

I wrote earlier in the week how digital signage and DOOH companies were seeing shortages and growing concern about having business finally come back, only to learn critical parts are now scarce.

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