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Chips Are in Hot Demand—and That’s a Problem

Chips Are in Hot Demand—and That’s a Problem

Semiconductor companies are asking their customers for patience as the industry works through a sharp increase in demand from makers of everything fro

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Semiconductor companies are asking their customers for patience as the industry works through a sharp increase in demand from makers of everything from cars to consumer electronics.

The chip shortage has caused prices to rise for certain semiconductors, delays in filling orders and auto makers to idle factories. If the problems persist, consumers may see delays in getting new cars and some electronic devices, and possibly higher prices.

There is no quick fix to the situation, either. Adding new chip-making machinery can be expensive and slow, and some of the deepest supply problems are taking place with older production lines that are less lucrative for manufacturers.

“In the whole semiconductor industry there is very little [spare] capacity right now—everything is doing well,” said Risto Puhakka, president of VLSIresearch, an industry-analysis firm. “We’re coming off a record investment year, and the demand continues to grow.”

The shortages add to the upheaval currently affecting the semiconductor industry. Intel Corp. this week ousted its chief executive, Bob Swan, after product delays, and mobile-phone chip giant Qualcomm Inc. added to a deal-making frenzy.

This post first appeared on wsj.com

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