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The pandemic caused companies to buy chips like people were buying toilet paper.

• Gigachad 5y ago
  If every company suddenly decided that they now want to keep a years stock of their important parts rather than a week, the demand just went up 52x right away. It's no surprise even basic parts are sold out for the next year at least.
  • sokoloff 5y ago
    All that does is pull through a year of extra demand. (I’d be more inclined to call it a doubling of annual demand rather than a 52x.)
    • bestham 5y ago
      On a weekly basis that would be a one time 52x increase in incoming orders. On a yearly basis it would be a one time doubling. But that is just semantics. What is important to discuss is that no one was paying for a extra idling factory before, and now suddenly it is needed for one year to satisfy every customer wanting to keep a one year local buffer. One also have to take the effect of a one year buffer for the whole supply chain into account. The demand for the manufactured good also increased due to their customers wanting to keep the same one year of buffer, so the one year buffer (based of your previous demand) would be consumed solely by your customers buffer and your orders would have to be larger than one year of inventory for you to keep one year of inventory after the demand spike. In the end it is easy to imagine that new buffers would lead to a huge scarcity, especially for the longer supply chains.