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

It's tale of push and pull. On the one hand, more chips were shipped in the third quarter than any previous quarter, but on the other hand, various supply chain problems and shortages of certain chips hurt auto and smartphones, among other products. (Getty Images)

Global sales of chips reached $145 billion in the third quarter, up 27% from a year ago.

Also, more semiconductors were shipped during the third quarter than during any other quarter in history, according to the Semiconductor Industry Association.  The number of chips shipped in September passed 100 billion for the first time ever, the association reported. 

The record shipments demonstrated “ongoing demand high demand for chips and the industry’s efforts to ramp up production to meet that demand,” said John Neuffer, SIA president.

Sales in the Americas increased more than any other regional market, up by 33% over a year earlier, then Europe, by 32%, and Asia Pacific (27%), Japan (24%) and China (24%).  China averaged $16.7 billion in sales  for each month in the third quarter, compared to $10.7 billion for the Americas.

The third quarter results demonstrated  contradictory trends. There were record revenues and shipments of chips, but also  severe problems from chip shortages for OEMs, such as carmakers and smartphone producers.

Some of the chip shortages can be blamed on the supply chain, with difficulties shipping orders including with backups of 40-foot containers at some ports of entry.   Susquehanna Financial Group recently said that the average wait time for chip deliveries to factories had reached 22 week, with the microcontrollers needed by the auto industry at 38 weeks wait time.

Smartphone shipments saw a 6.7% decline globally in the third quarter, while carmakers said they saw steep declines in third quarter production and profits.

Analysts at IDC said the causes of the smartphone supply chain problems included stricter testing and quarantine problems and limits on power to assembly plants and fabs in China.  In October, some electronics factories in eastern China continued to face irregular power outages with the increased demand for their goods.

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The outlook for fourth quarter is not much better and analysts and producers of finished goods  are expecting chip shortage problems to continue well into 2022.