According to Gartner, the global chip shortage could end in 2023 and overcapacity will follow, as semiconductor companies have expanded massively since the Covid-19 outbreak.

Gartner analyst Alan Priestley pointed out that chip makers generally start investing when supply and demand balance, in preparation for the next increase in demand.

However, the oversupply caused by the expansion will be shattered by growing demand in a few years. Priestley emphasized that the interaction of supply and demand is typical of the chip industry.

When production capacity is in short supply, chips with simple processes are usually more difficult to obtain capacity supply due to lower profits. As a result, car or electronics production lines can also be shut down due to simple component shortages.

A fab cannot be built in a few months, nor can a 7nm fab be easily converted to a 5nm fab. Since the shortage occurred, major semiconductor companies have announced production expansions. These expanded capacities cannot be put into the supply chain in a short period of time, and once these capacities are released, it may suddenly cause oversupply.