Global chip shortage is not over and the slowdown is ‘going to bite,’ IDC says

The global chip shortage will continue, and consumers will have to pay for it, an analyst from the International Data Corporation said.

One analyst told CNBC Tuesday that the war in Ukraine is putting a strain on supplies of important parts.

There isn't going to be an immediate increase in the supply of Semiconductors. Vinay Gupta, the International Data Corporation's Asia-Pacific research director, told CNBC that there were a lot of raw materials and gases that were needed for the production of those Semiconductors.

Citing supply chain challenges due to Russia's war in Ukranian, Gupta said the two countries capture a large part of the market share.

Neon is important for the chipmaking process and is used for lasers where machines carve patterns onto tiny pieces of Silicon made by the likes of Intel and TSMC.

According to Peter Hanbury, an analyst at Bain & Co., more than half of the world's neon is produced by a few companies in Ukranian.

Mobile phones, computers, cars, and home appliances are just some of the things that use transistors.

Supply chain disruptions and rising costs will cause the average selling price of the devices to rise and the infrastructure vendors to pass it on to the customers.

Gupta said that rising inflation and expectations of more monetary tightening are causing a consumer led slowdown.

Consumer IT spending is showing signs of a downturn.

Businesses have been forced to protect their IT budgets because of inflation.

He said that this is going to bite because of the rising interest rates.

Gupta said that the government and central banks are trying to balance the rising inflation and interest rates.

The Federal Reserve is likely to raise its interest rate in July and September even if the economy slows, according to statements made last week.

The Fed raised its benchmark borrowing rate by 75 basis points in June, the biggest increase in 20 years.

Apple plans to slow hiring and spend less next year to deal with a possible downturn, according to a report. There will be a similar trend in Asia's tech sector.

If the situation doesn't improve, we will start to see that in late 2022.

Increasing salary costs and skill gaps in the market are putting pressure on margins for the IT services in Asia.

Despite more hiring in the first quarter, the margins for the tech giants are lower in India. This might not last long.

He said that there were a lot of new digital transformation projects because of the swine flu.

The earnings of the enterprises will take a hit if we see the entire scenario playing out like we are right now.