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Signs are Mounting that Semiconductor Supply is Improving

Barchart - Thu Nov 4, 2021

Quarterly earnings results from Qualcomm (QCOM) late Wednesday show that the global semiconductor shortage may finally be easing.  Although Qualcomm said in an earnings conference call that pockets of shortages will persist in the first half of 2022, chip supply is set to align with demand in the second half of 2022.

Qualcomm, the world’s largest smartphone chipmaker, rallied to a 9-month high today after it reported Q4 adjusted revenue of $9.32 billion, above the consensus of $8.86 billion, and forecast Q1 revenue of $10 billion-$10.8 billion, stronger than the consensus of $9.73 billion.  After the earnings results, Goldman Sachs raised its recommendation on Qualcomm to a buy from neutral.

Qualcomm was the latest in a string of companies that said it was navigating through the global chip shortage.  BMW AG on Wednesday reported Q3 gross earnings of 2.9 billion euros, beating the consensus of 2.5 billion euros, as it maximized its chip supply by boosting the output of its most lucrative auto models.  Also, Apple (AAPL) last week said it was allocating more chip components to the iPhone13 by cutting the production of iPads.

Diversifying suppliers has helped Qualcomm meet soaring chip demand. The company has farmed out the production of certain products to multiple manufacturers to help ensure it has enough supplies.  Qualcomm CEO Amon said the company has been working to lower a dependency on mobile-phone chips by selling semiconductors to automakers and other manufactures.

Signs are showing that the global chip shortage is easing.  A closely watched measure of chip delivery times didn’t grow as quickly in October, and delays shrank for some kinds of semiconductors.  Also, GXO Logistics, the world’s largest contract logistics provider, said it is starting to see more goods arrive at its facilities, signifying supply-chain snags are subsiding. 

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.