Bad news for anyone hoping for a quick end to the semiconductor shortage. AMD’s CEO Lisa Su is the latest tech CEO to suggest we won’t see a recovery until the back half of next year.
Semiconductor sales will remain “likely tight”, Su said at Code Conference 2021. She predicts that supply will start to improve next year as new manufacturing facilities come online, but that supply and demand may not equalize for roughly another year.
One of the slightly frustrating aspects of the ongoing semiconductor shortage is that it’s never very clear which product or market is being discussed in particular. Take the current situation in the PC retail channel. While AMD CPUs were difficult to come by earlier this year, chips like the Ryzen 7 5800X can currently be ordered for ~$395 at Amazon. That’s below the official MSRP of $449. This may be a flash in the pan, since AMD chips have been harder to find at various points in the year, but the CPU market isn’t showing much sign of shortages right now.
The GPU market, on the other hand, has been steadily moving in the wrong direction since the 4th of July, when prices hit their summer low of “just” 1.5x above MSRP. The situation was worsening earlier this month, though China’s recent decision to ban Bitcoin and crytocurrency mining could have an impact on GPU demand, at least in the short term.
At the same conference, Su downplayed AMD’s activity in the crypto market, noting it’s a small, volatile market and not one AMD intends to focus on. This is most likely true, but it doesn’t tell us much about how many of the company’s GPUs are flowing to miners anyway. It may be that AMD isn’t selling very many cards to miners because it isn’t shipping very many retail cards in the first place.
Nobody Knows How This Will End
Su’s predictions jive with those of Jen-Hsun Huang and from analyst firms, but it’s not clear how much value we should put on these predictions. The truth is, the semiconductor industry didn’t see the tech boom of late 2020 – 2021 coming. In the immediate aftermath of lockdowns, forecasts were predicting a slump once an early buying boom petered out.
The early buying boom never really wore off, and while there’s been signs of slower growth in some markets, there’s dispute about what to expect in the future. The semiconductor industry has committed to bringing new fabs online at breakneck speed. Capacity buildouts that start coming online 12-18 months from now could arrive just as market demand begins to fall off. GPU availability could improve dramatically now that China has banned cryptocurrencies, or it might not improve in the short term if other issues are clogging the pipes. There are reports that many companies have suffered recent shortages due to plant closures in Malaysia and elsewhere in Asia due to ongoing COVID-19 restrictions.
There are good reasons to think that things will be better 8-12 months from now. More factory capacity should be coming online. More people across the globe will have been vaccinated. Companies, individuals, and governments will have another year of experience dealing with the shortages and issues caused by the pandemic. Hopefully by this time next year, prices will be falling back towards normal.
But at the same time, we recommend readers take these predictions with several grains of salt rather than the usual one. A year ago, there were confident reports that the semiconductor shortage should ease by spring at the latest. Ampere celebrated its first birthday a few weeks ago, and we’re all still here. We’re not claiming that Lisa Su or any other tech executive is wrong, but the pandemic’s impact on the business cycle has been difficult for analysts to predict thus far.
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