Global chip shortage could flip to oversupply by 2023, according to IDC

Intel Core i9-10900K review
Intel Core i9-10900K review (Image credit: Harish Jonnalagadda / Windows Central)

What you need to know

  • IDC expects that the semiconductor industry will normalize and balance by the middle of 2022.
  • The same report states that there is a "potential for overcapacity in 2023" for semiconductors.
  • This overcapacity would be caused by semiconductor manufacturing efforts coming online by the end of 2022.

Semiconductor availability could see major growth over the coming couple of years, according to a report by IDC. In fact, IDC states that there's a "potential for overcapacity in 2023" as manufacturers expand capacity to make chips by the end of 2022. If that does occur, it would be a significant shift from the current global chip shortage.

Due to the global chip shortage, semiconductor manufacturers haven't been able to meet the demand for certain products, such as the Xbox Series X and the best GPUs. The demand for these types of devices will likely stick around, but manufacturers will have the ability to meet demand due to increased production efforts.

Several manufacturers, including Intel, Samsung, and TSMC, have plans for advanced chipmaking facilities. The U.S. government recently passed legislation to help the chipmaking process within the country. While some of the largest chipmakers plan to increase their efforts, foundries cannot be built overnight. Most of the expansions in the supply chain won't lead to results until the second half of 2022.

"The semiconductor content story is intact and not only does it benefit the semiconductor companies, but the unit volume growth in many of the markets that they serve will also continue to drive very good growth for the semiconductor market," says Mario Morales, group vice president, Enabling Technologies and Semiconductors at IDC.

While it could be over a year before supply catches up with demand, there could be good news on the way for people on the market for new hardware.

Sean Endicott
News Writer and apps editor

Sean Endicott brings nearly a decade of experience covering Microsoft and Windows news to Windows Central. He joined our team in 2017 as an app reviewer and now heads up our day-to-day news coverage. If you have a news tip or an app to review, hit him up at sean.endicott@futurenet.com (opens in new tab).

9 Comments
  • Well, "potential for overcapacity" isn't quite the same as forecasting that there will be "overcapacity" (and "overcapacity" doesn't mean a glut). And as we can see from the last quote, IDC's bottom line is that semiconductor demand is going to be very strong for the foreseeable future. They mention overcapacity because they think it's possible, not because they think it's likely.
  • As theoretical this might be, it's still a relevant data point. Nevertheless it's highly likely there will be oversupply as 1) by 2023 most people would have built set ups or bought laptops for remote working or hybrid working. Most people do not upgrade every year. 2)people will be more cautious with disposable cash due the ongoing pandemic. As when this pandemic is over, there will be a lingering economic fallout. Does that mean GPU prices will come down? Yes and no. As wafer costs could go up, Amd, Nvidia, Intel will mostly increase prices with Intel undercutting. And so on..
  • "It's a relevant data point" It's not a data point. It's a piece of analysis by IDC. "Nevertheless it's highly likely there will be oversupply as 1) by 2023 most people would have built set ups or bought laptops for remote working or hybrid working. Most people do not upgrade every year." That doesn't seem to be the case. As Microsoft and their Windows OEMs are at pains to tell you, the drop off in PC purchases they expected after the first year of Covid didn't materialize, and it's because WFH is here to stay even after the pandemic. It just opens up too many opportunities and too much flexibility for companies and their workers. Hybrid work is not going away, and there's a regime change in purchasing decisions as a result. "2)people will be more cautious with disposable cash due the ongoing pandemic. As when this pandemic is over, there will be a lingering economic fallout." That's the opposite of what happened. University educated people in advanced countries weren't more cautious with their money; they just didn't spend it on travel, so their savings piled up. And since they overwhelmingly could work from home, they didn't lose their jobs. So they've got more cash than ever, just not much to spend it on.
  • 1) analysis done by one can be used as a data point by another. It's called data modelling and trend analysis. You don't create a signal model and call it a day. You create multiple models with various variables. 2)just because a subset of a population in a country didn't lose their jobs. Doesn't mean everyone didn't lose their jobs. Also, by 2023 people who have decent savings would have bought something. I thought both points would have been fairly obvious to you. But, I guess not. In regards to the drop off you are referring to - that's a moot point. As we are talking about 2023 not what happened previously.
  • Chips is not only needed for PCs. There is car industry, which currently stops production because of chip shortages. And there, electric cars are growing big each year...
    Then, there are consoles. Graphic cards mostly sells to crypto miners, not gamers... And that is the biggest reason of these shortages. Crypto miners buys everything they can produce...
  • By 2023, gamers who haven't been able to secure upgrades will be more than ready and willing to do so. Vehicles will require more chips than ever. So will smartphones and consoles. There will be no oversupply in two years.
  • That would be correct if there was no new fabrication plants being built.
    But new fabs are being built... So, it's highly likely there will be some form of oversupply.
  • Hopefully in two years, more wealth will be built as well. That'll lead to more disposable income, thus more demand for electronics. The new fab plants couldn't be more timely.
  • The current fabs can't produce enough for all those industries which growing constantly. Especially electric cars. So new fabs are needed. And they wouldn't build them if they think that current demand for chips is only temporary...