Daily Management Review

STMicro CEO Predicts Global Chip Shortage To Continue Till H1 Of 2023


STMicro CEO Predicts Global Chip Shortage To Continue Till H1 Of 2023
According to the predictions of the chief executive of STMicroelectronics, the current global shortage of semiconductor chips that has affected the production of companies in a range of industries – including the likes of Apple Inc and Volkswagen AG, will not end any time soon and is most likely continue till about the first half of 2023.
"Things will improve in 2022 gradually, but we will return to a normal situation ... not before the first half of 2023," said Jean-Marc Chery in an interview with the media.
The "normal situation", according to Chery, is one where companies will be able to maintain regular chip inventory levels and the average delays for replenishing of components and chip inventory from order will be of about three months.
Chery said that prices of chips are getting stimulated by the chip shortage which was triggered by a sudden boom in demand from a wide range of industries. Chery has been heading the Franco-Italian chipmaker since 2018.
He said that there has been a 5 per cent year on year growth in the average price of STMicro's chips in 2021. The company now expects prices for its chips to go up further during the second half of 2021 as well as in 2022, he added.
"It's not like in the past, when everyone was waiting for Microsoft (MSFT.O) to release a new operating system that would drive demand for many more computers," Chery said. "What we have is global shift ... with massive orders for components."
Chery said that the current production capacity of the Geneva based group will be enough to be able to meet only 70 per cent of the total chip demands from customers for the current year. He added that further investments being made by the company in augmenting production capacity will allow it to increase the proportion of customer demand meeting to between 85 and 90 per cent next year.  
Earlier on Thursday, STMicro raised its full-year sales and investment outlook with the group’s second quarter profits being boosted by a surge in demand from car and phone makers.