Global chip shortage hit these 169 industries: GS

According to an analysis by Goldman Sachs, the semiconductor shortage touches a mind-blowing 169 industries in some way. Yahoo Finance’s Dan Howley discusses.

Video Transcript

JULIE HYMAN: In addition to some of the tech giants that we talked about at the top of the show that are reporting this week, a lot of chip makers are included in those numbers. We're going to hear from Texas Instruments, Applied Micro Device, Micro Devices, excuse me, Qualcomm, as well. And undoubtedly, they're going to talk about the chip shortage and how it's affecting their business.

But as we know, it's affecting almost every business. Dan Howley has been tracking the number of different industries that are affected by the chip shortage. And your tally is what? 169? How can this be? I mean, Dan, what is the industry that surprised you the most? Let's start there.

DAN HOWLEY: I mean, it's literally everything. Toilet paper manufacturing, probably the one that really kind of blew me away. This is all based on, Goldman Sachs did a study, essentially what they said was, that they looked at different industries that use semiconductors, microchips in some way in the production of their goods. So that may be the machinery that they need to put the goods together or the goods themselves. And then they looked at how big of an impact that the chip shortage is going to have on them. So they estimated around 1% of the industry's GDP output.

So essentially what they came to was, these 169 industries that are most impacted. Now for automotive, for instance, it would be a potential 4.7% hit to the output of the entire automotive industry because of this chip shortage. And then like I said, you're looking at different industries and you wonder, how does this even happen. We're talking about packaging machinery is an industry that is going to be impacted. So literally, the industry that packages goods will be impacted.

Small electronics, basic organic chemical manufacturing, anything that has to do with synthetic rubber, synthetic fibers. We're talking about adhesive manufacturing, wireless communications obviously. We have an entire chart on our website for the article on this. And it runs down the different industries that are going to be hit. And yeah, toilet preparation manufacturing was one that got me.

But I think the others are really just industries that you wouldn't expect. And I think that's the scariest part, is when any body thinks about semiconductors and these chips, they automatically think consumer electronics and obviously, automotive, because of the fact that plants have had to idle as a result of the shortage and what that means for making the cars. But it really is across the entire economy, these companies are being impacted because they can't get the chips that they need.

And then obviously, this all started as a result of the pandemic and the increased need for semiconductors from consumer electronics. But that just meant that more and more industries were being left behind with the need to get semiconductors as well. And now they're even further behind. And the fact that it takes for advanced chips, up to six months to be built, means that they're going to be behind for quite some time.

And there's an estimate that it'll take until 2022 for all of this to be sorted out. So look, if you're looking to get a new car, maybe now's the time to get it. Prices are obviously going up. But we may see prices go up for a few of these things just as a result of the fact that they can't build them as quickly as they want to.

JULIE HYMAN: And Dan, just quickly as I mentioned, we're going to hear from a lot of the chip makers this week. We heard from Intel last week. And presumably, this is mostly good news for them, right? They've got some pricing power, they're seeing hot demand still. So are there any downsides for them or is it mostly upsides?

DAN HOWLEY: It's likely mostly upside, except for maybe they won't be able to service their data center customers as much as they want to. Those are some of the most advanced chips out there. So obviously, AMD is going to want to make sure that they can have as many chips on hand as they want to be able to service those customers. And if they can't, then that could be a problem for them.

Qualcomm, not necessarily big as far as the data center space goes. They have some data center processors. Obviously, they've been talking, in talks to use their chips in those applications. They are more in the commercial space or the consumer space rather, and that's really where they could be impacted. And that could be a problem, just because they wouldn't be able to get their goods out the door fast enough.

And look, we've heard from Samsung. They said that they see this as a huge imbalance and a big problem. And they may not be able to release their second flagship phone on time this year, or they may just skip it entirely because they don't have access to the chips that they need. Obviously, they use their own Exynos chips in some versions of those phones, but other versions they use Qualcomm's chips. So the fact that it's two companies' chips and Samsung also suffering from the shortage, it's kind of a double whammy for them in that respect.

JULIE HYMAN: Yeah, so we'll keep an eye on that situation. A bit unique, of course, among the chip makers there, because they also do make those phones. Thanks so much, Dan Howley, have a great Monday. We'll catch up with you soon.