Chip Industry May See Overcapacity in 2023


imageThe great chip shortage could eventually morph into a chip-making oversupply problem by 2023, according to IDC , which expects the supply chain to return to normal in mid-2022.

“The industry will see normalization and balance by the middle of 2022, with a potential for overcapacity in 2023 as larger scale capacity expansions begin to come online towards the end of 2022,” the research firm predicts.

Indeed, major semiconductor makers—including Intel, TSMC and Samsung—have all boosted investment in expanding chip capacity amid the current shortage.At the same time, the US government wants to spur more domestic chip manufacturing with billions in potential funding.

The big question is which sectors will see the semiconductor supplies improve to the point of overcapacity.Current shortage have ensnared a wide range of products, including PCs, graphics cards, video game consoles, in addition to cars, smartphones, and smart home devices.

IDC didn’t immediately respond to a request for comment.But the research firm expects the semiconductor shortage to ease through this year’s fourth quarter as more capacity is added.In the meantime, existing factories are completely booked.

Recommended by Our Editors Inside the GPU Shortage: Why You Still Can’t Buy a Graphics Card Chip Shortage Leads GM to Reduce Production Analyst: Chipset Shortage Now Affects ‘Everybody But Apple’ “IDC reports that dedicated foundries have been allocated for the rest of the year, with capacity utilization at nearly 100%,” the research firm adds.

“Front-end capacity remains tight but fabless suppliers are getting the production they need from their foundry partner.”

That’s good news for Nvidia and AMD, which don’t own any chip factories.Instead, they contract with Samsung and TSMC to manufacture their graphics cards .However, Nvidia itself expects the shortage to persist through much of 2022, when the company is expected to release next-generation graphics cards in the RTX line.

“I would expect that we will see a supply constrained environment for the vast majority of next year is my guess at the moment,” Nvidia CEO Jensen Huang said during an earnings call last month.

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