A global shortage of semiconductors is affecting everything from smartphone sales to car manufacturing. Disruption caused by Covid-19 has collided with an unprecedented surge in demand for electronics, says Wallace Witkowski for MarketWatch. Research firm IDC reports that PC sale volumes are expected to advance by 18% this year. Global shipments could hit 357.4 million computers, beating the record set in 2011.
Car makers have been particularly badly hit by the shortages; many cancelled chip orders when the pandemic hit, only to be surprised by the strength of demand for new vehicles. The shortage means it’s a good time to be a chip maker. The PHLX Semiconductor Index has gained 92% in a year. Building a new manufacturing plant can take two years and costs several billion dollars, so analysts say the shortage is likely to persist at least into next year.
But don’t buy into the boom, says Daniel Tenreiro for National Review Capital Matters. The chip industry has always been highly cyclical. Periodic shortages provoke new investment, which leads to excess supply and plunging prices. This time governments are also getting in on the act: the US, EU and China are all creating subsidies to ensure that they can have a sovereign supply of chips. In a few years we could have a glut of silicon.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Are wealthy whisky enthusiasts leaving Britain?Collectables Wealthy whisky enthusiasts are heading to tax-friendly countries such as Dubai, where there is more disposable income to spend on collectable luxuries like rare whisky.
-
Zoopla: Property tax speculation creates uncertainty for a third of home buyersProperty tax rumours could impact homes valued at over £500,000, potentially triggering a housing market slowdown, Zoopla has warned
-
Are wealthy whisky enthusiasts leaving Britain?
Collectables Wealthy whisky enthusiasts are heading to tax-friendly countries such as Dubai, where there is more disposable income to spend on collectable luxuries like rare whisky.
-
'The rise and fall of Kodak is a lesson for the tech giants'Opinion The long decline of Kodak – a once-dominant company – shows why no business is safe from disruption, says Matthew Lynn
-
8 of the best properties for sale with kitchen gardensThe best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growthGrowth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
