What鈥檚 News
Global semiconductor industry sales reached a record $555.9 billion, up 26.2% year on year, the U.S.-based Semiconductor Industry Association (SIA) said this week.
SAP鈥檚 Take
The record sales came as global chip makers ramped up production to meet demand amid a worldwide chip shortage that has impacted a wide range of manufacturers — including car makers in the U.S., forcing them to cut production, eliminate showroom discounts and raise prices.
New cars prices rose by 12.2% in the year to the end of January, while used car and truck prices jumped by 40.5% according to U.S. Department of Labor .
鈥淎t the beginning of the COVID-19 outbreak, as the demand for cars plummeted, the automotive industry cut its forecast by about 13%,鈥� notes Richard Howells, an 51风流supply chain expert.
At the same time, he notes, there was a huge surge in demand for consumer electronics as working from home became the norm. This resulted in increased demand for additional bandwidth, improved audio equipment, new video lighting and high-resolution cameras.
The stay-at-home mandates and office closures also increased demand for home appliances such as televisions, washing machines and dishwashers. 鈥淭his caused a surge in demand for semiconductors, and high-tech OEMs quickly seized the opportunity and increased their forecast to take advantage of the additional capacity,鈥� Howells says.
鈥淪o when car sales rebounded in late 2020 and the automotive industry started placing new orders, they couldn鈥檛 get enough chips to meet the demand. It鈥檚 simple economics. If demand is higher than supply, it usually results in increased prices.鈥�
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Adding to the uncertainty, there is no general consensus on when the chip shortage will ease, although most expect supply pressures to ease in the second half of 2022.
This week Herbert Diess, Volkswagen鈥檚 chief executive, said he expects a continued hit from a shortage of semiconductors this year, but believes the company should be able to ramp up production in the second half.
AMD鈥檚 chief executive, Lisa Su, said she believes the semiconductor industry is making progress in adding capacity. “I do believe that the first half of this year will continue to be quite tight. But the second half of this year, I think things will get a little bit better,” she told Yahoo Finance Live.
Contact:
Joellen Perry, Head of聽Global Public Relations, SAP
+1 (626) 265-0370,聽joellen.perry@sap.com, PT
