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Light at the end of the tunnel for chip shortage

Maarten Grooff Maarten Grooff
Light at the end of the tunnel for chip shortage

The current chip shortage appears to be coming to an end. It even seems that there may be overcapacity in two years' time. This is what market specialists from IDC say in a recent study into the state of processor production until 2025.


The production of processors is increasing significantly again according to IDC research. Production capacity must return to 100% by the end of this year. Chip manufacturers are currently struggling with supply, but this should return to normal in the next three months due to increased productivity at back-end manufacturers.

In 2022, the industry will stabilize further and function as usual. Because many investments have been made in new chip factories, productivity will increase even further. This could even lead to overcapacity in 2023.


Despite the good predictions, according to the researchers, there are a few obstacles that could affect chip manufacturing. Until 2023, the industry will continue to suffer from a shortage of raw materials and back-end production. The raw material shortage can only be resolved in two years, when this shortage is resolved, production can only really take off and a surplus can therefore be achieved.

Another challenge is that the price of processors and chipsets continues to rise. Since the second half of this year, the price has increased due to the increase in material costs. The second reason is that many costs are incurred for the development of new high-quality process technology. These high costs will be maintained this year. It is not stated what the costs will be for 2022 and later.

Other observations

In addition to the general chip market, IDC experts also noted a number of developments in the field of processors this year. Among other things, it is expected that the chip shortage in the automotive industry will be resolved by the end of this year. The result of this is a growth in turnover for these types of products.

More EU chips

Von der Leyen (President of the European Commission) has announced a chip treaty so that the EU is independent of the industry in Asia and the US. The EU plans to stimulate the European chip industry. The chip shortages and local government support for the powerful factories in Asia and the US have set the European Commission in motion.

This is done to stop inter-European competition and better compete in the global market. The intention is that research & development and financing between various European countries will be linked and joint action will be taken. The European Union has said it wants to increase its share of the global market by 20 percent by 2030.

Building a chip sector in Europe is ''not just a matter of our competitiveness. It is also a matter of technical sovereignty,” Von der Leyen said in her speech. Yet consultations are underway with non-European manufacturer Intel to build a new European factory costing perhaps 80 billion euros.

Source: Techzine

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