The global lag in the manufacturing of semiconductors as demand for electronics in everything from cars to clever appliances continues to soar, is predicted to impact supply through 2022, with $500 billion worth of revenue losses already recorded so far.
Moreover, says Deloitte in a recent report about the worldwide chip shortage, rapid growth in demand for semiconductors over the past two years is expected to take the sector’s market cap to $600 billion this year.
The professional services network said it should be borne in mind that the chip industry seemed to be ballooning beyond manufacturing capacity.
In its report it struck a comparison with the farming as well as oil and gas industries, which it said still dwarfed semiconductor manufacturing.
The market caps of food production and oil and gas exploration are $10 trillion and $5 trillion dollars respectively, Deloitte said.
However, “80% of the world’s food or fuel doesn’t come from a handful of manufacturers concentrated in just a few countries”.
Deloitte added: “Across multiple end markets, the absence of a single critical chip, often costing less than a dollar, can prevent the sale of a device worth tens of thousands of dollars.
“Based on our analysis, the chip shortage of the past two years resulted in revenue misses of more than US$500 billion worldwide between the semiconductor and its customer industries, with lost auto sales of more than US$210 billion in 2021 alone.”
In the meantime, semiconductor manufacturers are scrambling to keep pace and add capacity, announcing massive investment exercises to improve output in a desperate bid to meet demand.
It was unlikely though that the lag would shrink this year, said Hock Tan, CEO of chip maker Broadcom in San Jose, California.
The company is booked solid beyond 2022, with prospects pointing to 2023 also being used as a catch-up year.
