Global Chip Shortage Continues for Automakers but Improves for Electronics

The global shortage of semiconductor chips is slowly easing, with some sectors of the economy recovering and others still woefully short of supply.  Some chipmakers are warning of cooling demand for parts used in personal computers and smartphones, while carmakers continue to grapple with a shortfall of certain chips.

CFRA Research said, “supply constraints are not being felt equally.”  The biggest customers, such as Apple (AAPL), Microsoft (MSFT), and data center players, are getting priority, while more fragmented industries that are not as relevant to the chip industry, such as industrial companies and automakers, are being forced to wait for chips.

Consumer electronics are the most vulnerable to an oversupply issue after Micron Technology (MU) last week cautioned of slowing demand for memory chips used in computers and smartphones.  Micron said it would cut spending on new plants and equipment to slow output.  However, Samsung Electronics today reported a better-than-expected jump in quarterly revenue, which is a good sign for consumer demand.

The production of chips used in premium and mid-tier 5G devices have also outstripped demand. According to Counterpoint Research, most of these smartphone chipsets, like application processors, system-on-chip chipsets, and basebands, are made by Qualcomm (QCOM), Apple, MediaTek, and Samsung Electronics.

Automakers are still struggling to secure enough semiconductor ships to keep auto production running at full capacity.  General Motors (GM) said it expects Q2 earnings results to take a hit due to issues with specific components.  The bulk of chips used in auto production come from NXP Semiconductors NV (NXPI), Infineon Technologies AG, Renesas Electronics, Texas Instruments (TXN), and STMicroelectronics NV.  The chip shortage is slow to improve for automakers, with chip delivery times falling by only one day in June. 

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