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Global semiconductor chip shortage likely to get worse, further pushing prices higher

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Global semiconductor chip shortage likely to get worse, further pushing prices higher

KUALA LUMPUR: Prices for semiconductor chips are expected to rise across the spectrum given that the global chip shortage is likely to last until sometime late next year.

Moody’s Analytics said the trend towards remote work that accelerated due to COVID-19 movement restrictions has given rise to heightened demand for semiconductor chips.

“Given the capital-intensive nature of their production process, supply has not been able to keep pace with the increase in demand,” it said in a note today.

It noted that the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co, has been raising prices across the spectrum, some by as much as 20 per cent, while three Chinese chipmakers have been fined by the Chinese government for abnormally high price increases.

“Chip prices have already risen, and they are likely to rise even further.

“What are some downstream effects from these price and quantity dynamics? Car prices have risen significantly, with average unit sales US$8,200 higher than two years ago, and we can expect more of the same,” it added.

Moody’s Analytics noted that the Chinese manufacturing producer price index (PPI) is soaring, and similar pass-through effects can be seen in other manufacturing PPIs worldwide.

“With the Purchasing Managers’ Index for most of the countries that have significant chip production capability falling over time, we can expect the shortage to linger for a while and should be prepared for a bumpy ride ahead,” it said. – Bernama



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