EIU "Semiconductor Chip Shortage Likely to Continue Until Mid-Next Year"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The global semiconductor chip shortage is expected to continue until the middle of next year.

On the 6th, the Economist Intelligence Unit (EIU), a British economic analysis organization, made this forecast in a report titled "Asia Trade Brief: Global Semiconductor Chip Shortage."

EIU predicted this, stating that the increased demand for consumer electronics since COVID-19 will persist until next year.

Although some advanced countries will achieve high vaccination rates within this year, most OECD member countries are expected to continue vaccinations until the middle of next year, leading to sustained consumer demand for smartphones, laptops, and entertainment devices.

In particular, EIU forecasted that household appliances such as refrigerators and air conditioners, which use a high proportion of older generation semiconductor chips and have many manufacturers, will see the chip shortage resolve relatively quickly, but the automotive sector will face issues until the middle of next year.

Regarding this, EIU pointed out that while some countries like the United States and China are encouraging prioritization of vehicle chip production, major semiconductor manufacturers have little economic incentive to shift production from highly profitable consumer electronics chips to vehicle chips.

Additionally, although the United States and the European Union (EU) have announced large-scale investments, building factories requires significant costs and time, so ultimately, the resolution of the current semiconductor chip shortage depends on Asia.

They added that the results of large-scale investments will only begin to be seen in 2023?2024, and in the long term, there is also a risk of oversupply.

Accordingly, they assessed that once the situation normalizes, mergers to secure competitiveness among semiconductor companies may appear after 2024.