In the post-epidemic period, rapidly recovering demand and stretched supply have become one of the main contradictions of the global economy, which is vividly reflected in the chip industry.

The continuing global chip shortage has plagued the automotive and consumer technology industries for months. However, the chain reaction of this crisis may continue until 2022, and the impact will be far more than automakers' cuts and shutdowns, and consumers will have to wait longer for some of the latest electronic products. According to an analysis by Goldman Sachs, the semiconductor shortage has hit 169 industries around the world to some extent. LED lights is being hit also. The bank pointed out that from the production of steel products and ready-mixed concrete to the construction of air-conditioning systems, refrigerators and breweries, even the soap manufacturing industry has been affected by the chip crisis. In order to determine which industries have been hit by supply shortages, Goldman Sachs studied the proportion of each industry’s demand for microchips and related components to its GDP. The bank believes that those industries that spend more than 1% of the industry’s GDP on chips will be affected by semiconductor shortages. For reference, in the automotive sector, 4.7% of industry GDP is spent on microchips and related semiconductors, on this basis, according to Goldman.

Why is there a shortage of chips?

When the demand for rapid recovery meets the shortage of supply that is exacerbated by insufficient investment and natural disasters, chip shortages occur.

1, Demand for consumer electronics products is still strong: The original expectation was that as the epidemic eases and people return to the office, the demand for consumer electronics such as laptops and game consoles will decline, but the fact is that the demand for these products is higher than expected More sticky

2, Rapid recovery of pent-up demand: Continuous fiscal stimulus and improvement in consumer confidence have led to a faster recovery in sales of other durable goods, including smartphones and cars;

3, Structural demand is also playing a role: With the introduction of 5G, the rise in structural demand, as well as the widespread application of artificial intelligence, high-performance computing and automatic/electric vehicles, have all promoted the growth of chip demand, especially now Each product requires more chips than before.

4, Preventive inventory may also play a role. In the context of global trade frictions, some companies are hoarding parts due to concerns about potential export restrictions.

On the supply side, insufficient investment and natural disasters have exacerbated tensions.

According to reports, since the end of last year, the entire OEM industry (logic chips) has experienced tight supply.

To make matters worse, a series of natural disasters occurred at the same time as the supply was insufficient:

1, In February, Texas suffered a severe winter storm, which caused chip companies such as NXP Semiconductors, Infineon, and Samsung to suspend operations;

2, The production of Renesas, the world's third-largest automotive chip manufacturer, was interrupted by the earthquake in February and the fire in March;

3, On Apr.14th, TSMC's production was affected by a power failure.

4, On Jun.1st, affected by Malaysia’s new “lockdown” policy, the production lines of many local semiconductor factories were required to maintain low-level manpower operations and the production lines were reduced in load. As Malaysia contribute half (13%) share of the Southeast Asia 27% share of the global packing and testing market. The lockdown measure will make the global chip shorage even worse.

Then for LED Lighting market, how is it going on there?

Led chip shortage, raw material price continues rising, the entire supply chain is in short supply and delay in delivery, but the demand for led lights continues to rise, the biggest stress ever.

Chips aren't exactly easy to make, either, with advanced semiconductors taking up to 6 months to produce. The chip crisis is still far from over, however, and as industry leaders and politicians work to ease the strain on manufacturers, consumer goods will still cost more as a result, with Goldman predicting a 1% to 3% jumping in prices.

All in all, if you’re in need of a car or some kind of laptop or other pieces of consumer tech, or a led lighting fixture, now is the time to buy — if you can find them.

So here we Xindeco announce that all Xindeco LED lighting products, including LED streetlights, LED tunnel lights, LED flood lights, LED high bay lights, LED modulars, etc delivery time will be 13+ weeks, with the chip shortage worse there, the lead time will become longer and longer. So please kindly go through all projects and confirm orders as soon as possible to strive for a better delivery time. Contact Us for any enquiry!