Chip delivery times fell in August, but some shortages drag on, Auto News, ET Auto

Chip investors are already bracing for a steep decline. The Philadelphia stock market’s semiconductor index has fallen 33% this year.

Chip delivery times fell further in August, a sign that the global shortage is still easing, but some types of semiconductors remain hard to find.

Lead times – the gap between when a chip is ordered and when it is delivered – averaged 26.8 weeks in August, according to research by Susquehanna Financial Group. It was one day less than in the previous month.

Chip delivery times fell in August, but some shortages drag on
The shorter wait times reflect slowing demand for certain types of technology, namely phones and personal computers, according to Susquehanna analyst Chris Rolland. But parts of the market remain overheated, with orders arriving faster than chipmakers can fill them.

“We believe that overordering trends and inventory building haven’t worked in the system yet,” he said in a research note.

In the personal computer market, Supply Chain has largely resumed normal operations, Dell Technologies Inc. chief financial officer Tom Sweet said Thursday. Many component costs are becoming cheaper as availability has improved and demand has weakened, though Dell is working to clear inventory before it can take advantage of more favorable component prices, Sweet said. .

The chip industry often struggles to match supply with demand, in part because components take months to manufacture. Semiconductor makers also serve a much larger share of the economy these days, with chips entering cars, factory equipment and appliances.

In the past, investors viewed extended lead times as a sign that the industry was hoarding too much inventory – a precursor to a crisis. But supply chain disruptions caused by the pandemic have created unprecedented shortages. Going back to wait times of 10 to 14 weeks would be “healthy,” Rolland said.

The wait for some power management, microcontroller and optoelectronic devices remains long, Rolland said. Companies such as Microchip Technology Inc. and Infineon Technologies AG are still struggling to fill these kinds of orders.

However, other chipmakers are already suffering from a drop in demand. Including Nvidia Corp. and Intel Corp.which are highly dependent on the PC market.

Chip investors are already bracing for a steep decline. The Philadelphia stock market’s semiconductor index has fallen 33% this year.