The global chip shortage will not affect semiconductor prices

The global chip shortage is a problem for multiple industries that does not seem to change. However,we should not expect prices for other types of chips to rise, said the Asia-Pacific chief economist of Natixis – a research firm.

This shortage mainly hit Carmakers, but the crisis has a negative effect on everything from televisionsto gaming consoles.
However, not all of these products or industries might suffer the same way. According to Alicia Garcia-Herrero of Natixis, there might be an oversupply of specific chips. On Thursday, she told CNBC that those chips that overcapacity are lower-end chips. She added that this is because China isplanning to invest in that part of the supply chain.

On Squawk Box Asia, Garcia-Herrero said that there would be a segmentation of prices. The lower–end chips might have low prices, but the relevant onesfor 5G and electric vehicles might remain at the same price. She added that these would have some inflationary effects.

Other reasons for the shortage

The ongoing shortage also resulted from companies that started stockpiling as the pandemic ariseglobally, and supply fears grew. However, geopolitics has a big part in it too.

In the middle of the tech race between the U.S. and China, last year placed restrictions on the biggest chipmaker Semiconductor Manufacturing International Corporation. This fact made it harder to sell its products to companies with American ties.
As a result, several companies started to stockpile essential chips after these restrictions.

Garcia-Herrero commented that those geopolitical risks would not go away. The tech sector and the U.S. government tried to boost the semiconductor manufacturing capabilities of the country as a hedge with this risk. Some of the U.S. companies even started to design their own chips. Today, most of the world’s chips are produced in South Korea, Taiwan, and China.