Even in an industry famous for its roller-coaster cycles, chipmakers are bracing for a particularly severe shift in coming months, when a record-setting sales surge is threatening to give way to the worst decline in a decade or more.
The semiconductor market enjoyed a massive run-up in orders during the pandemic, sending sales and stock prices to new highs and triggering a global scramble to find enough supplies. There was hope in some circles that the boom could be sustained for several more years without a painful pullback, but chipmakers are now facing a familiar problem: growing inventory and shrinking demand.
It’s a dilemma as old as the computing age. It takes years to build a chip plant, and they don’t always come online when they’re most needed. In the last few years, the problem was a lack of supply. As recently as this quarter, automakers and some other customers were complaining they still couldn’t get enough electronic components.
