The wait for a new car may be longer as the chip crisis worsens Business and Economic News

The shortage of the semiconductor industry, which has already frustrated automakers and consumer electronics companies, is even worse, and the global economy has made it difficult to recover from the coronavirus pandemic.

Chip deadlines, the difference between chip ordering and delivery, rose to 17 weeks in April, indicating that users are desperate to secure supply, according to a study by Susquehanna Financial Group. That’s the longest wait since the company began tracking data in 2017, in what it describes as a “risk zone”.

“All major product categories are rising significantly,” analyst Chris Rolland Susquehanna wrote in a note Tuesday, citing power management and analog chip deadlines, among other things. “These were some of the biggest increases since we started tracking data.”

The chip shortage is behind the industry, which is preventing companies from shipping products from cars to game consoles and refrigerators. Automakers expect to lose $ 110 billion in sales this year, according to Ford Motor Co., General Motors Co. and others have to shut down factories for lack of essential components. That is a reduction in economic growth and employment, as well as fears of sorting out the panic that could lead to distortions in the future.

The chip industry and its customers see deadlines as an indicator of the balance between supply and demand. Increasing the gap indicates that buyers of semiconductors are willing to commit to future supply so that shortages do not recur. Analysts are tracking these numbers, which could lead to an accumulation of too much inventory and a sudden drop in orders.

“High periods often force“ bad behavior ”among customers, such as accumulating inventory, building a safety stock, and placing a double order,” Rolland wrote. “These trends may drive the semiconductor industry to outperform actual customer demand in the early stages of overshipment.”

The situation has been complicated by the recovery of coronavirus cases in Taiwan, which is a key location for chip manufacturing. The country has closed schools, reduced gatherings and closed museums and public facilities. While businesses and factories operate, the government will need to consider broader restrictions.

Country Taiwan Semiconductor Manufacturing Co. is the most advanced chipper in the world and Apple Inc. and Qualcomm Inc. has among many customers. Local manufacturers also produce such fascinating (but equally critical) chips, such as screen controller ICs, which have been a particularly painful bottleneck for global production.

On Wednesday, Taiwan’s Disease Control Centers raised the alert level across the island, extending Covid containment measures across the country. On the same day, the Water Resources Agency said Taiwan needs to tighten water-saving measures because it has received little rain during the traditional rainy season, exacerbating the drought that has also threatened production.

TSMC said in a statement that it will continue to tighten water use and does not anticipate that the measures will affect operations.

In his report, Rolland wrote that the 17-week waiting level had risen from the 16-week level and was expanding “significantly” for the fourth consecutive month.

Some product periods are increasing significantly, even after a shortage of several months. According to Susquehanna, for example, energy management chips went 23.7 weeks in April, about four weeks longer than a wait a month earlier. Industrial microcontrollers promise three-week extension periods, some of the toughest increases since Rolland began tracking numbers in 2017.

Delays tend to be worse for smaller manufacturers, who, according to people familiar with the supply chain, face headphones for more than 52 weeks. This has forced companies to redesign products, change priorities and, at least in one case, completely abandon a project, people said, asking them not to name it because the information is not public.

About 70% of the companies that run Rolland’s routes increase the deadlines, and 20% have seen contrasts. NXP Semiconductors NV, a leading automotive chip supplier, has a lead time of more than 22 weeks about 12 years ago. STMicroelectronics NV, another key auto chip supplier, spent more than 28 weeks in April.

These external increases may reflect excessive demand from some customers, who may be concerned about the impact of the shortage on businesses. Historically, companies have been able to cancel chip orders without penalty, even if that began to change.

“Starting with the January data, we’ve seen a lot of big JUMPS in the LTs complained of,” Rolland wrote, citing deadlines. “In previous years, when individual companies typically moved the LTs up and down in a given month from a few days, we’ve seen significant jumps in LTs that have skewed our data since this year.”