Apple has ‘excessive’ inventory of chips and semiconductors

TSMC, Apple’s main chip supplier, says it has an “excessive” inventory of chips and semiconductors. Blame it on ever-diminishing demand from consumers around the world, after two years of working remotely.

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It’s no secret that the tech world has been facing a shortage of chips (semiconductors) since the start of the pandemic. Apple, Google, Nvidia, Tesla… All are more or less impacted, whether for the production of smartphones, PCs, electric cars, graphics cards, etc.

By contrast, the world’s biggest chip supplier, TSMC, said in an earnings call on Thursday that, although its net profit reached record highs (up 76.4% year-on-year), slowdown in demand of PCs, smartphones and other consumer segments have led to a ” excess inventory in the semiconductor supply chain “.

A situation that should be regularized within several quarters

This decline in demand follows several confinements and two years working remotely for many workers. A period during which consumers have equipped themselves a lot with tech products, as the supplier specifies.

Another culprit of the chip supply shortage, cryptocurrency mining, has imploded in recent months as their values ​​continue to fall. At the same time, geopolitical tensions and soaring inflation are adding to the uncertainty.

In other words, the chip shortage is far from over. As inventory of high-end chips (found in most consumer and modern tech products) increases, demand in other market segments, including data center and automotive, has declined (or remained stable).

To read: Ukraine produces 70% of neon, enough to increase the shortage of chips

Supply for these areas is tight and TSMC needs to reallocate resources to accommodate such constant demand. That might not be enough, however, as the chipmaker says consumer needs will continue to outstrip their ability to supply.

TSMC says the application will help sustain its business through the end of this year. Apple’s next iPhone 14 could play a major role, with TSMC being the Cupertino company’s sole chip supplier. The group also supplies semiconductors for Qualcomm, Nvidia, AMD and MediaTek, among others.

TSMC is not the only company to sound the alarm: last month, Micron also warned of falling demand for consumer products.

Source: The Motley Fool

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