Woodchip delivery times have been significantly reduced in recent years as shortages have been reduced
What happened now? The chip crisis has been a depressingly familiar topic in the news cycles over the past 12 months, but the bad old days of demand vastly outstripping supply seem to be over. Further evidence of this is chip delivery times, which last month fell by four days, the most in years.
According to a study by Susquehanna Financial Group (via Bloomberg), lead time — the time between ordering a chip and its delivery — averaged 26.3 weeks in September. This is less than about 27 weeks in the previous month. For comparison, autumn from July to August lasted one day.
The waiting period in August was still much longer than before the pandemic – in October 2019 it was only 12.7 weeks – but the size of the monthly decline is significant. Bloomberg writes that latency has been reduced for all key product categories, with the biggest declines seen for power management and analog chips.
At its peak, the chip shortage had a huge impact on industries like the automotive industry. And anyone who tried to buy a graphics card between mid-late 2020 and a few months ago will remember how bad things were.
Ironically, many industries are now suffering from the opposite problem. Consumer demand plummeted as factories ramped up production, Russia invaded Ukraine and inflation skyrocketed, leading to excess stocks. The oversupply has led to price drops for graphics cards, solid state drives and RAM. In the case of the last two, manufacturers were forced to cut production. In addition, companies such as AMD and Intel are missing sales forecasts and, in some cases, laying off employees.
But not in all markets the problems associated with the lack of chips have decreased. Dell CFO Tom Sweet said last month that the PC supply chain has returned to its historical norm, despite some problems remaining, but the server market continues to suffer due to a shortage of semiconductors. However, the shortening of delivery times may ensure that Sweet’s forecast that the market deficit will ease in the fourth quarter is accurate.