Global chip shortages to rage on deep into 2022, Gartner predicts

Researcher suggests four key measures to help businesses cope with chip shortages

Gartner predicts that the worldwide shortage in semiconductor chips will last until the second quarter of 2022.

Shortages started primarily with devices such as power management, display devices and microcontrollers but have since extended to other devices, Gartner says.

Orders for chips originally fell at the start of the pandemic leading to reduced production, but the subsequent rise in demand for electronics then caused global shortages along with other factors.

"The semiconductor shortage will severely disrupt the supply chain and will constrain the production of many electronic equipment types in 2021," said Kanishka Chauhan, principal research analyst at Gartner.

"Foundries are increasing wafer prices, and in turn, chip companies are increasing device prices."

Gartner has divided the chip supply level into three categories - severe, moderate and normal - with the research group estimating that chip shortages are currently still in the severe zone.

It predicts that by the end of this year, there will be only moderate shortages but that the supply will not return to normal until 2022.

The prediction comes after the CEO of Cisco, a vendor that has been badly affected by the component shortages, forecast that the situation won't begin to ease at least for another six months.

Gartner has suggested four measures for OEMs dependent on semiconductor supply which includes extending supply chain visibility, which it says will be "critical in projecting supply constraints and bottlenecks and eventually, projecting when the crisis situation will improve."

It also says smaller OEMs with more critical supply should look to partner with similar organisations in order to gain leverage with chip foundries, while companies should also track leading indicators such as "capital investments, inventory index and semiconductor industry revenue growth projections".

Finally, Gartner suggests supplier bases should be diversified which would "go a long way in reducing risk".