GM (GM) issued an impressive Q4 earnings report on Tuesday, beating analysts’ expectations on earnings per share in the quarter. But it was CEO Mary Barra’s comments about the ongoing chip shortage that caught Wall Street’s attention.
In a statement released alongside the auto giant's earnings, Barra said the semiconductor shortage that has shuttered auto plants and slowed vehicle production will begin to ease in the coming months.
“With an improving outlook for semiconductors in the U.S. and China, we expect our 2022 results will remain strong,” Barra said.
So that’s it. The chip shortage is over, and we can finally go back to buying cars and game consoles without having to worry about whether they’re in stock, right? Not exactly.
The chip shortage may be easing, but it’s far from ancient history. Major semiconductor producers ranging from Intel (INTC) and Nvidia (NVDA) to NXP Semiconductors (NXPI), one of the largest suppliers of automotive chips in the world, say the dearth of processors will continue into 2023.
Chip makers are building new plants, but it’s not going to help anytime soon
While the impact of the chip crunch on the automotive industry may begin easing sooner rather than later, it’s not coming to an end. And that goes for the consumer technology industry too.
That might sound strange given the fact that you’ve likely heard about a number of chip makers building new plants both in the U.S. and abroad. But those plants aren’t built overnight. Heck, they won’t even be ready in a year.
Take Intel’s recent announcement that it will spend $20 billion to build a new chip manufacturing complex in Ohio. That huge chunk of change will be used to construct two plants. Eventually, the company could build out the site to consist of eight plants at a total cost of $100 billion.
That’s good news for the U.S., which has seen its total chip manufacturing capacity dwindle over the years.
But those first two plants won’t be completed until 2025, if they’re finished on schedule. Other companies including Samsung, Texas Instruments (TXN), and GlobalFoundries (GFS) are building plants across the U.S., but like Intel’s plants, they won’t put a dent in the current shortage.
Even if those plants magically appeared overnight, the chips themselves take quite a while to build on their own. Manufacturing high-end semiconductors can take up to six months.
In other words, while the shortage may be easing for automakers, it’s not over quite yet.
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