Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      19 June 2025

      WhatsApp founders hated ads – Meta is adding them anyway

      19 June 2025

      China’s car factories run cold as price war masks deep overcapacity

      19 June 2025

      Yellow Card, Visa in deal to hasten stablecoin uptake in Africa

      19 June 2025

      Jaltech backs solar firm Wetility in R500-million capital raise

      18 June 2025
    • World

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Yahoo tries to make its mail service relevant again

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Electronics and hardware » After years of supply constraints, is a chip glut coming?

    After years of supply constraints, is a chip glut coming?

    By Ian King13 April 2022
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    The accumulation of inventory by chip makers has usually been a sign of impending doom for the industry. As companies raced to meet demand that built up during the pandemic, they amassed a huge stockpile of chips.

    Ordinarily, gluts are followed by a plunge in prices and a struggle for chip makers to find buyers. That concern is why investors are selling semiconductor stocks this year after three years of gains. The Philadelphia Stock Exchange Semiconductor Index has dropped 23% so far in 2022 compared to a slide of 7.7% by the S&P 500 Index.

    But many companies argue this time is different. Executives from Analog Devices, Micron Technology and Broadcom are among those who say inventory is rebounding from dangerously low levels and they’re only building what’s required to meet the growing demand for their products.

    Semiconductor sales, which took about 45 years to reach $500-billion, will double to $1-trillion in 10 years

    Analog Devices chief financial officer Prashanth Mahendra-Rajah said that looking at inventory in aggregate, whether in value or measured in days, doesn’t give as accurate a picture as it has in the past. More devices use chips now, so higher stockpiles reflect what’s needed to satisfy these new markets rather than an impending glut. Based on what Analog Devices is seeing, there might be some pockets of inventory build-up, but in general there’s healthy demand and not enough supply, he said.

    “There is a concern by investors that customers have stockpiled inventory,” Mahendra-Rajah said in an interview. “There’s a concern by customers that there’s no inventory available for them.”

    Not everyone is convinced.

    Downturn coming?

    “Over the last several months, inventory levels have become elevated within nearly every end-market segment, as compared to the pockets of inventory that we identified in prior quarters,” said Chris Caso, an analyst at Raymond James. “The pattern unfortunately looks eerily similar to our analysis at this point in 2018 — which preceded the subsequent industry downturn by six months.”

    Investors and analysts will be seeking clues to which view is correct as the industry’s largest companies give their latest quarterly updates in the next two weeks.

    Many chip-maker management teams are sticking to the assertion that the industry is still only at the beginning of a massive expansion fuelled by ever increasing numbers of items that are getting computer-like functionality. In the past, orders for PCs and smartphone components determined the health of the industry. Now, company executives say demand is more widely distributed and less prone to swing from gluts to shortages.

    Last week, the Analog Devices management team repeated their belief that semiconductor sales, which took about 45 years to reach US$500-billion, will double to $1-trillion within the next 10 years.  — (c) 2022 Bloomberg LP



    Analog Devices Broadcom Micron Technology
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleGlobal technology supply chains are in serious trouble
    Next Article EOH prospects looking up, but debt still a concern

    Related Posts

    TSMC eyes JV to run Intel’s foundry operations

    12 March 2025

    Intel on the chopping block

    3 March 2025

    Is Broadcom the next Nvidia?

    18 December 2024
    Company News

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025

    Sage brings together HR leaders to explore the future of payroll and people management

    18 June 2025

    Altron: a brand journey, a birthday celebration and a bet on Joburg’s future

    17 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.