From chip shortage to glut: The perfect storm enters a new phase, and that’s good news for consumers

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From chip shortage to glut: The perfect storm enters a new phase, and that's good news for consumers
from chip shortage to glut: the perfect storm enters a

The message from the semiconductor industry has changed. After several years with a shortage of chips, now there is talk of just the opposite. With the low demand due to economic uncertainty and increased production to compensate for the previous situation, a new stage has been passed. A phase where, finally, consumers could win with lower prices.

TSMC warns of excess stock. The large Taiwanese chipmaker had a banner quarter, with profits up 76%. However, it also warns that they have excess inventory. An excess of chops that, they calculate, will take a few quarters to be compensated at logical levels. The forecasts, as described by Nikkei Asia, is that until the first half of 2023 they will have excess stock.

As described by Reuters, manufacturers hoarded chips during the pandemic like some consumers did with toilet paper during quarantine. A separate case are the latest generation chips for devices such as those of Apple or those used for the automotive industry, where there is not expected to be an excess.

The demand for mobile and computer chips has collapsed. The mobile telephony sector has left behind its best days and the demand for computers and other electronic consumer goods has also decreased these months. The solution of manufacturers such as TSMC is to look at the manufacturers of vehicles and data centers, where the trend does seem to continue to be positive and they will try to compensate for the low sales.

Other manufacturers such as Intel, Micron or Samsung also expect a complicated second half of 2022 for their accounts. In the case of Samsung, they have even asked their suppliers to stop component shipments while they review the number of chips they have at their disposal.

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GPUs, memories or cheaper phones. We reported back in April that the graphics card pricing nightmare was ending. In this new situation, where manufacturers have produced enough and have not been able to sell as much, the opposite effect is expected with prices.

As Mixx.io points out, the fall in hardware prices may be widespread in the coming months, from components for computers to mobile phones. A drop in the price level to help balance the stock level and encourage demand.

Pay attention to this Black Friday 2022. We consumers have had quite high prices in the electronics sector for two years. This situation is expected to change towards the end of 2022 and the beginning of 2023, mainly in those devices that incorporate chips of this generation or the previous one.

This excess stock can be reflected in good prices and offers during the promotional campaign last quarter. We will have to be careful. If our personal economy holds up, it may be a good time to renew our devices.