Almost a year into a global chip shortage, the problems are increasing for many customers as delays get even longer and sales are lost.
Manuel Schoenfeld placed an order in May for transmission chips for the utility-monitoring devices made by his New York-based company PowerX. He was told the chips would arrive by summer, then fall, then winter and now doesn’t expect to get them until May 2022.
“This is far from over,” Mr. Schoenfeld said.
The global semiconductor shortage is worsening, with wait times lengthening, buyers hoarding products and the potential end looking less likely to materialize by next year. Demand didn’t moderate as expected. Supply routes got clogged. Unpredictable production hiccups slammed factories already running at full capacity.
“It really feels as if we are running out,” Mr. Walker said.
The $464 billion semiconductor industry has been unable to keep pace, leading to lost revenue across the board. The pain is spreading beyond the initially affected—like car makers and home appliance manufacturers—to makers of other products, including medical equipment and smoking devices. The smartphone industry will grow by just 6% year-over-year, or half the initial forecast from earlier this year, because of chip woes, according to Counterpoint Research, which tracks handset shipments.
Apple Inc. warned Thursday that supply-chain disruptions are hindering iPhone and other product manufacturing ahead of the holiday-shopping quarter, even as the company reported a record 12-month profit.
Chip makers say the lack of supplies has caused them to lose sales. “Trust me, we would be shipping a lot more if we weren’t constrained by the supply chain of these other components in the industry,” Intel Corp. Chief Executive Pat Gelsinger said last week on an earnings call. Mr. Gelsinger has said he expects shortages to last until 2023.
Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, said he would have thought six months ago that chip shortages would start easing by this time. But now he said they will likely last until 2023. Wells Fargo Investment Institute recently revised down its U.S. GDP forecast to 6.3% from 7% as the chip shortage limited the supply of consumer goods.
“This is playing out considerably longer than we initially thought,” Mr. Wren said.
A supply bounceback this year relied on rosy assumptions that already maxed-out production wouldn’t face further setbacks. But the chip-making process is under duress from beginning to end.
Basic building-block materials such as substrates are in short supply. Mishaps from bad weather and fires have interrupted wafer production. The final stage of manufacturing has been undercut by virus outbreaks and subsequent factory closures in Malaysia, which specializes in product packaging.
Global shipping constraints have added to disruptions and delays. Chip assembly can require that parts travel up to 25,000 miles before becoming finished products, according to a report by Accenture and the Global Semiconductor Alliance.
Sourcing chips has turned almost into a lottery, leading to over ordering that creates more supply strain, industry experts say.
“People are buying a lot of parts to have just in case, and that’s exacerbating the shortage,” said Willy Shih, a professor of management at Harvard Business School, who specializes in semiconductors and supply chains.
Stockpiling could also lead to an inflated sense of demand, analysts warned, which has raised concerns that an industrywide ramp-up in supply could lead to a chip glut. Major chip makers such as Taiwan Semiconductor Manufacturing Co. , Samsung Electronics Co. and Intel have announced ambitious investments to increase production, but such facilities cost billions of dollars and take years to become operational.
The auto industry, hit hard and early by the chip shortage, has been the most vocal in calling for increasing supply. The world’s largest contract chip maker, TSMC, has boosted auto-chip production by 60% this year, but car makers have struggled to recover as factory closures continue and estimated losses mount.
On Wednesday, General Motors Co. and Ford Motor Co. each reported steep drops in third-quarter profit as the computer-chip shortage dented factory output. Both companies said they see the semiconductor situation gradually easing next year.
“Nobody expected it to get as challenging as it is right now,” said Ambrose Conroy, founder of supply-chain consulting firm Seraph. “We’re not going to get ahead of this for quite a while.”
Even companies considered to have well-established supply chains, such as Tesla Inc. have noted challenges in meeting customer demand, as a lack of critical components has weighed down production and been a drag on revenue growth. Other businesses have also begun to warn investors of a prolonged impact.