Global gaming suppliers are among a range of industries set to benefit from an expected easing of semiconductor supply shortages in the second half of this year.
According to ratings agency Fitch, the chip shortage will ease due to increased capacity and the potential for demand to moderate from currently high levels, despite pockets of near record low inventory throughout the supply chain.
The global chip shortage has been brought on by a range of conflating factors, most notably ongoing border restrictions in the key manufacturing jurisdictions of China, Hong Kong and Taiwan. Many of the world’s largest chipmakers, including leading edge foundries Taiwan Semiconductor (TSMC) and Samsung Electronics produce a significant amount of chips in these countries, Fitch observed.
The gaming industry has not been immune, with IGT’s Sales Director, Asia, Michael Cheers, telling Inside Asian Gaming in a recent interview, “Like so many technology companies, we’re navigating a global chip shortage which has added a little bit to our lead times and is going to be an ongoing challenge.”
However, Fitch said in a Tuesday note that chip foundries have been “aggressively adding capacity since 2021” which “will help alleviate supply constraints for cyclical end markets.”
In particular, major manufacturers are in the process of building production facilities outside Asia and most notably in the United States where the government “supports building domestic capacity to reduce supply chain risk, as the majority of chips are currently produced in Taiwan and South Korea.” Intel, TSMC and Samsung are among the companies increasing their investment and adding facilities in the US in 2022.
Fitch warns, however, that volatility within the supply chain could drag into next year if border restrictions across Asia don’t start to ease.
“Pandemic-driven government intervention, particularly in countries that maintain a zero-COVID policy, will exacerbate supply volatility and could push out supply chain normalization,” the agency said.
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