Chip delivery times are on the rise again

Companies are losing out on billions of dollars in revenue.
A semiconductor board. Image: SeongJoon Cho/Bloomberg

Delivery times for chips rose in December, signaling persistent component shortages that have slammed growth for months in industries that span the economy.

The lead times — a closely watched gap between when a semiconductor is ordered and when it is delivered — increased by six days to about 25.8 weeks last month compared with November, according to research by Susquehanna Financial Group. That lag marks the longest wait time since the firm began tracking the data in 2017.

Susquehanna recently changed the method it uses to calculate lead times, adding more data sources, and has revised its previous estimates based on the new system.

Companies from Apple Inc. to Ford Motor Co. are losing out on billions of dollars in revenue because they can’t get a sufficient supply of semiconductors to meet demand for their products. The push to get components is also forcing up costs, the companies have said.

“The rate of lead time expansion has been choppy, but picked up again in December,” Susquehanna analyst Chris Rolland said Tuesday in a research note. “Lead times for nearly every product category witnessed all-time highs, with power management and MCUs (microcontrollers) leading the charge.”

In the past, lengthening lead times have been followed by painful periods of oversupply. The concern is that customers may try to purchase more than they need now in an effort to ensure they get chips and will later cancel the requests, which the industry calls double ordering.

While average times stretched again, some major suppliers are delivering products to their customers in a more timely manner, the research showed. Broadcom Inc.’s lead times “modestly fell” to 29 weeks in December, according to the report.

© 2022 Bloomberg L.P.

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