Chip delivery times are rising again

Chip delivery deadlines rose in December, signaling persistent shortages of components that have slowed growth in industries covering the economy for months.

According to research by the Susquehanna Financial Group, delivery time – a closely monitored gap between the time the semiconductor was ordered and when it was delivered – increased in six days to about 25.8 weeks last month compared to November. This delay marks the longest waiting time since the company began tracking data in 2017.

Susquehanna recently changed the method it uses to calculate delivery times, adding more data sources and revising its previous estimates based on the new system.

Companies of Apple Inc. to Ford Motor Co. they lose billions of dollars in revenue because they cannot get enough semiconductor supply to meet the demand for their products. The desire to procure components also increases costs, companies say.

“The delivery time expansion rate was volatile, but rose again in December,” Susquehanne analyst Chris Rolland said in a research note Tuesday. “Delivery times for almost every product category were record-breaking for all time, with power management and MCUs (microcontrollers) leading the way.”

In the past, extended delivery times have been accompanied by painful periods of oversupply. The concern is that customers may try to buy more than they now need in an effort to ensure they get the chips and will later cancel the requests, which the industry calls double ordering.

While average times have lengthened again, some large suppliers deliver products to their customers on time, research has shown. Delivery times Broadcom Inc. “fell moderately” to 29 weeks in December, the report said.

© 2022 Bloomberg LP

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