2 October 2024
Investors are unprepared for the full scale of the global semiconductor shortage’s fallout, a leading US fund manager has warned.
Investors are unprepared for the full scale of the global semiconductor shortage’s fallout, a leading US fund manager has warned.
In an editorial for LiveWire, Janus Henderson portfolio manager Denny Fish cautioned that the shortage has so far been framed predominantly in terms of its impact in the tech and auto sectors.
The true effect of this shortage, however, is already stretching across all industries and geographic regions, and is even being felt at a consumer level, he said.
“The chip shortage is neither an annoyance nor a sideshow,” he said.
“Investors across asset classes and sectors need to realise that a 21st-century economy cannot operate without semiconductors.”
Mr Fish cited manufacturing as an example. Modern assembly lines often rely on semiconductors to operate, and if some of these fail at a time when replacements are not available, the entire production process could be derailed, he said.
Shortage expected to continue
Early into the current shortage, many analysts expected to see stockpiles start returning to normal by the end of 2021.
That forecast failed to materialise, and inventories are not expected to be rebuilt until mid-2022 at the earliest – while more cautious industry insiders warn it may not occur until 2023.
This lengthy recovery stems from the complex nature of semiconductor manufacturing, Mr Fish said, which makes it nearly impossible for new production capacity to be quickly brought on line.
Meanwhile, demand for semiconductors has hit an “inflection point”, Mr Fish said, with the need spurred on by COVID’s acceleration of remote work and digitisation.
“To make matters worse, a series of idiosyncratic disruptions along the supply chain further hindered capacity,” he added.
“The stark reality is that it took two years for the semi ecosystem to slip into such a deficit and it may take almost that long for it to claw itself out.”
Maserati stalls on the starting line
Italian sports car maker Maserati is the latest high-profile victim of the ongoing shortages.
In a press release earlier this month, the company revealed it has been forced to delay the global premiere of its latest SUV model, the Grecale.
The car’s debut was slated for 16th November this year, but has since been pushed back to 2022.
“Due to the shortage of semiconductors, the quantity of production would not allow us to respond properly to the expected global demand,” Maserati’s statement said.
“In fact, the new Grecale features ground-breaking contents, particularly in the connectivity and human-machine interface areas.”
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