Chip shortages are waning and that's bad news for Asian economies

Chip makers and other electronics component suppliers have enjoyed huge profits over the past couple of years due to strong demand for their products.
Nevertheless, the changing global economic environment could have a negative impact on both the performance of semiconductor suppliers themselves and the members of their supply chains.Image source: Alexandre Debiève/unsplash.comThe Wall Street Journal reports that a slowdown in the Chinese economy and economic fluctuations in the American technology sector will reduce demand for electronics from both consumers and corporate clients.
Shipments of smartphones and computers have already begun to decline.
Thus, according to IDC, in the first quarter of 2022 shipments fell by 8.9% compared with the first quarter of last year, and the supply of computers for the same period decreased by 5.1%.In general, the world as the pandemic restrictions are lifted customer interest is shifting from buying goods to services.
The situation is exacerbated by the economic crisis and ongoing COVID-19 outbreaks in China.
In the Celestial Empire, smartphone sales fell 14.1% in the first quarter.Across the Pacific, the drop in U.S.
tech stocks has reduced demand for IT equipment, and previously wasteful IT businesses are forced to tighten their belts.For example, server chips for data centers were an important factor in the growth of the semiconductor industry for a couple of years, but spending cuts by technology companies could seriously change the situation.Although the shortage of semiconductors, which lasted more than 18 months, recently becomes less acute.
The decline in demand could have a negative impact on companies that have accumulated large inventories of electronic components.East Asia, where most suppliers are located, could feel the negative effects of the drop in chip orders.
Sanitary restrictions in Shanghai and other Chinese cities due to the COVID-19 outbreak are known to have caused a drop in supply and demand not only in mainland China itself, but also in neighboring economies - Taiwan and South Korea.Image source: Alexandre Debiève/unsplash.comSouth Korean exports rose slightly in May compared to the same month last year, but only because there were fewer working days in May in 2021.
In contrast, exports of semiconductors and display panels fell compared to April, according to Morgan Stanley.
The lifting of sanitary restrictions in Chinese cities may lead to short-term growth, but serious changes are not expected until at least early 2023.The situation is very complicated.
Giants like TSMC are likely to be less affected due to their dominant market position, but smaller Asian businesses are likely to face tough times.