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Global Chip Hunger Is Showing Early Signs of Indigestion


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A Taiwan Semiconductor Manufacturing Co. facility.

TSMC CEO C.C. Wei said he continues to expect customers and other companies in the supply chain to build inventory through the end of the year, and to maintain higher levels for a longer period of time.

Credit: Bloomberg

Global orders for semiconductors keep rolling in, but the latest data from the world's biggest chipmaker hint that this strong demand is beginning to look like industry stockpiling. That could be a massive problem when supply chain bottlenecks ease.

Taiwan Semiconductor Manufacturing Co. on Thursday announced record profits thanks to orders for clients like Apple Inc., Nvidia Corp. and Advanced Micro Devices Inc. This optimism will continue through the foreseeable future, with the company expecting full-year growth of 24%.

But a large amount of those orders aren't going toward satiating global hunger for gadgets, connected cars, and burgeoning server farms. Inventories at the Hsinchu-based company jumped 66% by the end of September from a year prior, the fourth straight quarter in which this figure climbed more than 65%. Days of inventory, another metric used to benchmark how much product is sitting on shelves, stayed high at 85 days.

From The Washington Post
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