JPMorgan sees the global chip shortage dragging into 2022

jp morgan

The global chip shortage is set to drag on till 2022 — but the situation could improve from mid-year onwards as more supplies become available, a top semiconductor analyst at JPMorgan told CNBC.

The U.S. investment bank is recommending investors pursue longer-term trends in the semiconductor space — in areas like high-end computing globally as well as less-advanced technologies in China.

An ongoing supply crunch for chips has hurt production across a number of industries, ranging from cars to consumer appliances, personal computers and smartphones.

Some analysts and investors expect the shortage to last through to 2023, but JPMorgan is less bearish.

The global chip shortage will probably hit your everyday life
Foundries are companies that are contracted by semiconductor firms to build chips. IDMs, on the other hand, are companies that design, manufacture and sell those chips.

Structural trends tend to be longer-term, permanent changes in an industry whereas cyclical trends are influenced by the business cycle and typically return to the initial starting point after a few years.

There are two trends that the investment bank is “really positive on over the next three to five years,” he said.

The first is the very high-end compute segments, according to Hariharan. There’s ongoing disruption in high-end computing globally, which used to be very monolithic but is now being fragmented as more companies enter the space.