Top Chipmaker Warns a New Semiconductor Crisis Is Just Around the Corner

After three difficult years, car manufacturers are finally getting good news. Following the decline recorded by PC sales, chipmakers are presented with an opportunity the entire world was waiting for: the production of chips for vehicles can finally gain traction, which in the end means that the wait for a new car could eventually drop closer to pre-2020 levels.

But despite the terrific news coming on this front, Synaptics says there’s no reason to believe the crisis is over. As one of the companies whose profits went through the roof after the chip shortage emerged in 2020, Synaptics says it’s too early to start the party. This is because, the company’s CEO, Michael Hurlston, explains, a new semiconductor crisis could hit us as soon as next year.

Synaptics currently makes chips for a wide variety of applications, as well as parts that are used in voice recognition systems and car displays. The drop in PC sales, however, significantly impacted its revenue, with the current December quarter revenue already recording a decline of 13 percent.

The company’s CEO says the market has been “tough” lately, adding that the instability is what’s causing uncertainty in the market, especially in the short term. This is why, Hurlston says, it’s too early to celebrate the end of the chip crisis, as there’s a very good chance that a new wave of the shortage would hit us earlier than we can imagine.

The CEO says the industry hasn’t managed to address the main problem of the chip shortage, and that’s the reduced capacity for low-cost but still very common semiconductors. Most companies, especially those that are currently investing in new factories, are betting all-in on new-generation nodes that are supposed to power smarter technology. This means the common systems still in use today would continue to battle a fierce shortage that would eventually lead to more oscillation in the market.

The automotive market is one of the industries that are still struggling with supply issues. While in the PC sector production has already been aligned with the demand, carmakers continue to experience chip inventory problems not only because of the trend that Hurlston himself signaled, but also as a result of a mix that includes solid demand and a growing number of chips used on new-generation cars. The smarter new vehicles are getting, the bigger the number of chips they require, so in the long term, chipmakers should record increasing demand from the automotive industry.

The biggest names in the automotive world have already warned that the semiconductor crisis would continue this year, with GM’s CEO Mary Barra indicating the shortage could expand even “beyond” 2023. Previously, Intel predicted the constrained chip inventory would remain a problem until at least 2024.

While Hurlston's forecast is mainly aimed at the PC sector, the impact on the automotive sector could be massive. Chipmakers could once again end up struggling to meet demand, with the entire world eventually forced to deal with more disruptions in the global supply chain.