Here’s why the microchip shortage is decreasing

After a long period of severe microchip shortages and as the world monitors the level that can be reached the escalation of tensions between China and the United States Following the visit of the President of the United States Congress, Nancy Pelosi, to Taiwan -one of the main chip manufacturers-, the growth of global sales of semiconductors takes six consecutive months of slowdown.

In recent years, microchips have become increasingly important as they are essential elements in the manufacture of electronic devices. electric cars, mobile phones and other devices. An importance that has been further heightened by the pandemic – with consumers directing the money saved during the lockdown to the purchase of goods – and the implementation by governments of the transition to a zero-emissions economy.

Despite this, sales growth is slowing. One of the main causes is the decline in consumer demand due to the current inflationary scenario and economic uncertainty. Another reason is the slowing economy in China due to its Zero-Covid policy.

As a result, semiconductor production by two of the industry’s big players – South Korea and Taiwan – is also showing signs of slowing. In the case of South Korea, export growth for the world’s largest producer of memory chips fell in July to 2.1% from 10.7% the previous month, which represents the fourth consecutive month of slowdown.

For its part, manufacturing in Taiwan contracted in June and July, at the same time as production and demand fell. New export orders were the biggest dropas published Bloomberg.

For all these reasons, Evercore ISI analysts have changed their forecast for semiconductor revenue in 2022. While they previously forecast it to be around 17%now expect an increase of 11%. Looking ahead to 2023, they think there will be a 5% of base $615,000 million have calculated for this year.

Tensions don’t stop investment in China

It should be noted that the escalation of tensions between China and the United States does not seem to have a negative effect on investor interest in Chinese semiconductor manufacturers. In addition, the share prices of the largest Chinese companies in the sector rose by seven% Friday, which is the biggest rise since 2020. Instead, Pelosi’s visit left Taiwan’s chip companies 4% drop in 5 days.

This growing interest is due to the fact that investors believe that such a confrontation could driving the advancement of the microchip industry in the Asian country, according to Fortune.

Since 2015, China has invested billions to boost its chip manufacturing capacity and achieve a 70% self-sufficiency by 2025. Currently, the country continues to import semiconductors worth more than $300 billion a year.


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