Chip crunch: lead times up to 52 weeks, stability begins first half 2023

Everybody in electronics knows there’s a chip crunch, but how bad is it?  And when will things stabilize after stretching on for a year already?

New analysis from a Supplyframe Commodity IQ report suggests chip supply stabilization will not begin until the first half of 2023, compared with earlier reports that a sense of stability would re-emerge in the middle of next year.

The company also found that more commodities entered “red” status with the start of the fourth quarter in October. That means commodities in red have risen 53 % quarter over quarter, on average, after doubling in the third quarter.  The red means commodities have moved from yellow or green to red since July. Supplyframe also forecasts that 66% of all pricing is poised to increase, a finding supported by ample anecdotal reports.

As you might expect, Supplyframe sells its Commodity IQ report on an annual subscription basis, noting that is a combination of analytics and analysis, including input from more than 350 partners in its design-to-source intelligence network. The report looks at a wide range of commodities used in electronics such as raw materials like resins and metals and components like diodes and DRAM, assembly and testing bottlenecks, component production, constrained logistics and expanded lead times.

However, Supplyframe did offer Fierce Electronics a few insights beyond its Commodity IQ press release to detail what’s going on. 

In 2021, CIQ found that standard logic device lead times have increased by 75% on average. Most end-customers experience increases to 52 weeks.

All Vishay diode lead times have stretched by an added 10 weeks and are now at over 40 weeks, Supplyframe said.

Some Infineon MOSFET lead times are being quoted at more than 52 weeks, the company said. Lead times for polymer-tantalum capacitors have grown to 45 weeks for Kemet and 34 weeks for Panasonic.

All of these examples are subject to change, of course, but they do fall in line with widespread anecdotal evidence of delays and price increases.  One of the most egregious price hikes was reported in late September at Sensors Converge by Yashar Shahabi, senior vice president of Sourceability, a distributor who said one well-known chipmaker was charging $230 for a single chip that cost $7 before the pandemic—an increase of 30x.  Overall, pricing has gone up as much as 100%, according to Supplyframe.

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Susquehanna Financial Group recently told its customers that the average wait time across all chips for deliveries to factories had grown from about 12 weeks before the pandemic to 22 weeks on average in October and even to 38 weeks for microcontrollers used in the auto industry.

Semiconductor Industry Association on Monday reported that chip fabs and designers are working to produce more chips, noting that sales were up 27% in the third quarter to $145 billion globally. The number of chips produced in September passed 100 billion for the first time in a single month, SIA said.

The SIA report came just days after automakers reported production and profit declines in the third quarter over supply chain snafus and chip shortages.  The same factors have hurt smartphones and a range of commodity products.

RELATED: Record chip ramp-up comes during dismal quarter for auto, smartphones and other products