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Chipmakers are producing more units than ever, glut concerns rising

Intel Chip
Intel Chip (Image credit: 60 Minutes)

What you need to know

  • There's a global semiconductor shortage going on.
  • The nine leading chipmakers have amassed a record-breaking inventory to fight shortages.
  • There is a risk that too much production could lead to an eventual glut.

The global semiconductor shortage has been causing kerfuffles in all sorts of sectors, from automobiles to the best gaming laptops. Production pipelines have been slowed and stalled thanks to a lack of chips. And companies are working hard to fix that.

In a report by Nikkei Asia, it's tallied that the nine leading chipmakers globally have amassed an inventory worth $64.7 billion as of June. That record-high figure is a result of production efforts being escalated to combat the worldwide shortage, achieved even as many Southeast Asian chipmakers have suspended operations due to COVID-19 and its consequences.

These efforts are not without reason. NVIDIA expects shortages to last through 2022. Other companies have their sights set on 2023. Governments around the world are bustling to accelerate semiconductor operations, and China and the U.S. are having something of a tech war with each other over the topic.

However, despite all the discourse describing the situation as doom and gloom, there are those who are seeing supply chains return to some semblance of normalcy, raising concerns that too much production ramping could lead to an overstocking glut in the future. For example, SK Hynix and Micron Technology reported steady inventory declines, which goes against the flying-off-the-shelves narrative other companies are operating within.

With that said, even if some companies are seeing semiconductor supply problems disappearing, consumers are still suffering across the board at the far end of the pipeline. Just ask anyone who's been trying to get their hands on the best graphics cards and has visited a Best Buy recently.

Robert Carnevale is the News Editor for Windows Central. He's a big fan of Kinect (it lives on in his heart), Sonic the Hedgehog, and the legendary intersection of those two titans, Sonic Free Riders. He is the author of Cold War 2395. Have a useful tip? Send it to robert.carnevale@futurenet.com.

6 Comments
  • Well, on the flipside if there is over supply then that should help alleviate the demand shortages for awhile or result in oversupply for awhile effectively getting GPU prices to msrp for a short period.
  • The hypothetical oversupply would certainly have its benefits for consumers, that's for sure.
  • Indeed it would, I just hope if it does happen retailer take steps in preventing scalpers from pillaging most of the GPU stock.
  • "In a report by Nikkei Asia, it's tallied that the nine leading chipmakers globally have amassed an inventory worth $64.7 billion as of June. That record-high figure ..." That's with currently inflated semiconductor prices. If we used 2019 prices, things might look different. And in any case, we wouldn't expect every corner of the industry to be under strain. We should expect some semiconductor submarkets to be more affected by Covid than others. There's no hope for the bitcoin crowd, though (in more ways than one).
  • Time to short cryptocurrencies.
  • That would be a temporary effort. Crypto prices would bounce back up eventually