Is Supply Chain Crisis Out of Control?

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  • Optimism is in short supply among industrial chief executives.
  • Congested ports and a scarcity of labour and goods like semiconductors have bought some companies to a halt.
  • Koninklijke Philips (PHG.AS), the 35 billion euro Dutch group that makes everything from MRI machines to electric toothbrushes, is feeling the pain.

A recent news article published in the Reuters states that supply-chain crisis may be nearing its peak.

 Revenue-growth targets

Chief Executive Frans van Houten on Monday cut his revenue-growth targets, citing supply-chain problems.

Chip shortages and shipping delays might stop him from delivering around 200 million euros worth of orders in the fourth quarter, delaying revenue into next year.

Semiconductor squeeze to abate

However, that may be the worst of it. Philips expects the semiconductor squeeze to abate in early 2022, according to a person familiar with its operations, as investments in new semiconductor production made a year ago start to deliver the goods.

And on the shipping side, Philips reckons the current port chaos stems partly from bumper pre-Christmas orders.

Supply and demand may be coming back into balance, however slowly.

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Source: Reuters

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