If the chip shortage forecast is right, processor and graphics card shortages may continue until 2022.

According to a recent survey, chipmakers are suffering from a perfect storm of supply issues that will not be fixed until next year.

MarketWatch consulted with a number of experts about the latest supply and demand problems affecting chips that control all of our electronics, including, of course, PCs, with the industry being especially hard hit by Covid-19 (as well as logistical challenges, as well as much higher demand due to all the people operating from home), not to mention the trade war between the United States and China.

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Maribel Lopez, principal analyst at Lopez Research, discussed the aforementioned “complete storm” of market problems that is unlikely to be fixed anytime soon, adding that the increase in demand for PC-related chips was unexpected last year.

“We think semi [semiconductor] firms are shipping 10% to 30% BELOW current demand levels, and it would take at least 3–4 quarters for production to catch up with demand, and then another 1–2 quarters for inventories at customers/distribution networks to be replenished back to usual levels,” according to JP Morgan analyst Harlan Sur.

The article also quoted Christopher Rolland, a financial analyst at Susquehanna, who predicted that chip shortages would worsen as the spring approached.

According to Sur, if production doesn’t catch up for another three to four years, we’ll be staring at chip shortages before at least 2022, which isn’t a good idea for many that have been unable to acquire PC parts. As you’ve probably noted, the supply of graphics cards and processors — especially AMD’s Ryzen 5000 chips — has been severely impacted.

Region of risk

Rolland also cautioned that we might be going into “danger zone” territory in terms of chip order lead times, with wait times beyond 14 weeks (something that hasn’t happened since 2018).

The other thing is that, with production ramped up, what occurs next year (presumably) as demand levels begin to normalize — could the opposite dilemma, as we’ve seen in the past, arise, with suppliers having surplus inventory?

“We don’t see any big correction on the horizon, considering continuing supply constraints as well as continued optimism about improving demand in 2H21,” says Stifel analyst Matthew Sheerin. We’re more worried about ongoing production shortages and rising commodity prices than we are about a multi-quarter inventory correction coming up.”

The only bright spot in the market right now is chipmaker stocks, which are on a predictable upward trend, with trading in those stocks hitting new highs.

Aside from consumers, the other losers are scalpers, who purchase scarce goods and resell them at exorbitant rates on eBay. We’re also seeing reports of market gougers purchasing prebuilt devices with current-gen GPUs and/or CPUs in order to disassemble them and resell the parts individually for a profit. Strange and depressing times indeed…