NXP ‘for Sure’ Won’t Bridge Supply-Demand Gap Before 2023: CFO

When the semiconductor industry might reach “equilibrium” between supply and demand “seems to be the question that everyone is asking,” Bill Betz, NXP Semiconductor chief financial officer, told a J.P. Morgan investors conference in Boston Tuesday. NXP sees chip supply “incrementally improving” in 2022's second half “but not solving that demand gap that we have,” he said. “If we take out all of the double ordering and triple ordering” that’s prevalent in the supply chain, NXP estimates it’s “still not servicing about 20% of that demand as we go forward,” said Betz. “It’s going to take quite a while to get to equilibrium, and not in 2022, for sure.” NXP “would love to be at 2.4 months” of channel inventory, said the CFO. “Today, we’re at 1.6, 1.5.” To get from 1.5 to 2.4, NXP would need to ship $500 million worth of inventory “into the channel and assume none of it sells through,” he said. “So we have a long way to go to get it back to 2.4.” That’s one “of those leading indicators to understand how much of your demand is really real,” he said. “This is one of our clear indications that we’re far from making or getting to equilibrium.”