Analysts predict a potential chip oversupply in 2023

Analysts predict a potential chip oversupply in 2023

The chip shortage is expected to end in late 2022

The world is currently experiencing a chip shortage, as semiconductor manufacturers are failing to meet the world’s demand for silicon, both within the high-end consumer and enterprise markets and in lower-end chip manufacturing. 

The IDC has predicted that today’s shortages will be temporary, expecting a “normalisation and balance by the middle of 2022”. Furthermore, the analyst has predicted that the industry may see overcapacity in 2023, bringing today’s semiconductor manufacturing shortage to an end. 
 
All major semiconductor manufacturers aim to increase their supply of silicon, having previously revealed capacity expansions thanks to extensions to existing facilities and all-new fabs. Many of these expansions will start producing chips in 2022, a factor that will significantly increase the world’s supply of high-end and low-end semiconductors. 

These capacity increases will allow fabless semiconductor companies like AMD, Apple, and Nvidia to get access to the chips they need to meet the market’s demand for new products. This should help make high-end PC products more readily available, which should come as great news for PC gamers. 
 

     IDC expects the semiconductor market to grow by 17.3% in 2021 versus 10.8% in 2020. According to IDC, the industry will see normalization and balance by the middle of 2022, with a potential for overcapacity in 2023 as larger scale capacity expansions begin to come online towards the end of 2022.

Growth is driven by mobile phones, notebooks, servers, automotive, smart home, gaming, wearables, and Wi-Fi access points, with increased memory pricing. IC shortages are also expected to continue easing through 4Q21 as capacity additions accelerate.

 

Analysts predict a potential chip oversupply in 2023  
Capacity expansions will allow semiconductor fabs to take more orders and generate a larger income. Additionally, capacity increases will enable many other semiconductor companies to produce and sell more products to customers, increasing their potential sales and overall profitability. 

For companies like AMD, whose growth is currently supply-limited, all increases to semiconductor manufacturing capacity matter. The more chips that AMD can sell, the more the company will be able to grow. That said, AMD’s reliance on TSMC has tied the company to TSMC, with all of their current-generation products relying primarily on its 7nm lithography technology. 

You can join the discussion on the IBCs prediction of a 2023 silicon oversupply on the OC3D Forums. 

Analysts predict a potential chip oversupply in 2023