Chip Shortage Turns into Surplus
2022-07-15
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1The coronavirus pandemic left makers of personal computers, smartphones, and cars without the computer chips needed to make their products.
2That suddenly changed during a period of three weeks from late May to June.
3High inflation, China's latest COVID restrictions and the war in Ukraine have reduced consumer spending -- especially on computers and smartphones.
4Chip shortages turned into a surplus in some industries.
5By late June, memory chip company Micron Technology Inc.
6said it would reduce production.
7The sudden change in the market caught Micron by surprise, said Chief Business Officer Sumit Sadana.
8Worries about an industry recession have severely affected computer chip stocks.
9The Philadelphia Semiconductor index has fallen 35 percent so far in 2022.
10That is far more than the S&P 500's 19 percent loss.
11Hoarding is making the situation worse.
12 Hoarding is the practice of collecting or storing a large amount of something.
13Many manufacturers stored a large number of computer chips during the pandemic.
14Before that, those manufacturers ordered parts as close to production time as possible to avoid having extra supplies and to reduce storage space and spending.
15Experts say the computer chip surplus has hit unevenly across business areas.
16Big suppliers of chips to electronics makers will be hit hardest by the decline, said semiconductor expert Tristan Gerra.
17Computer chip design company Nvidia Corp could be hit especially hard as prices continue to fall, Gerra added.
18Nvidia produces graphic chips used for gaming and the digital money known as cryptocurrency.
19Among those least affected by a surplus are Apple Inc's suppliers like Taiwan Semiconductor Manufacturing Co, said computer chip expert Matt Bryson.
20Demand remains high for Apple devices.
21Industry executives and experts cannot say how many surplus chips are in storerooms around the world.
22But industry expert Mark Lipacis said supply numbers for the first three months of 2022 hit a record high at major electronics manufacturing services companies.
23The earlier record was over 20 years ago.
24Manufacturers may decide to use up chips in storerooms instead of buying new ones, and cancel orders, Lipacis warned.
25Some experts said automobile chipmakers are safe for now.
26But that may not last long.
27Industry expert Stacy Rasgon told Reuters that automakers were ordering far more chips than they appeared to need.
28That will create a problem when vehicle makers stop buying chips to use up their current supplies.
29I'm Jonathan Evans.
1The coronavirus pandemic left makers of personal computers, smartphones, and cars without the computer chips needed to make their products. 2That suddenly changed during a period of three weeks from late May to June. High inflation, China's latest COVID restrictions and the war in Ukraine have reduced consumer spending -- especially on computers and smartphones. 3Chip shortages turned into a surplus in some industries. By late June, memory chip company Micron Technology Inc. said it would reduce production. The sudden change in the market caught Micron by surprise, said Chief Business Officer Sumit Sadana. 4Worries about an industry recession have severely affected computer chip stocks. The Philadelphia Semiconductor index has fallen 35 percent so far in 2022. That is far more than the S&P 500's 19 percent loss. 5Hoarding is making the situation worse. Hoarding is the practice of collecting or storing a large amount of something. Many manufacturers stored a large number of computer chips during the pandemic. 6Before that, those manufacturers ordered parts as close to production time as possible to avoid having extra supplies and to reduce storage space and spending. 7Experts say the computer chip surplus has hit unevenly across business areas. Big suppliers of chips to electronics makers will be hit hardest by the decline, said semiconductor expert Tristan Gerra. 8Computer chip design company Nvidia Corp could be hit especially hard as prices continue to fall, Gerra added. Nvidia produces graphic chips used for gaming and the digital money known as cryptocurrency. 9Among those least affected by a surplus are Apple Inc's suppliers like Taiwan Semiconductor Manufacturing Co, said computer chip expert Matt Bryson. Demand remains high for Apple devices. 10Industry executives and experts cannot say how many surplus chips are in storerooms around the world. But industry expert Mark Lipacis said supply numbers for the first three months of 2022 hit a record high at major electronics manufacturing services companies. The earlier record was over 20 years ago. 11Manufacturers may decide to use up chips in storerooms instead of buying new ones, and cancel orders, Lipacis warned. 12Some experts said automobile chipmakers are safe for now. But that may not last long. 13Industry expert Stacy Rasgon told Reuters that automakers were ordering far more chips than they appeared to need. 14That will create a problem when vehicle makers stop buying chips to use up their current supplies. 15I'm Jonathan Evans. 16Jane Lanhee Lee reported on this story for the Reuters news service. Jonathan Evans adapted this story for Learning English. 17_______________________________________________________________________ 18Words in This Story 19consumer - n. a person who buys and uses up goods 20semiconductor - n. a solid substance that conducts electricity imperfectly 21_____________________________________________________________________ 22What do you think of this story? 23We want to hear from you. We have a new comment system. Here is how it works: 24Each time you return to comment on the Learning English site, you can use your account and see your comments and replies to them. Our comment policy is here.