KUALA LUMPUR (April 20): The heavy toll that chip shortages have inflicted on the auto industry is now broadening to other sectors, according to S&P Global Ratings.

In a report titled "Global Chip Shortage Engulfs A Growing List Of Tech Players" released today, S&P credit analyst Clifford Kurz said the chip shortage may cap the revenue growth of some PC and smartphone makers, and impede their ability to capitalise on surging consumption.

Kurz said chip vendors also need to manage rising costs as fabs increase prices amid a surge in demand for their services.

“We expect chip vendors to be able to largely pass on these higher costs to customers.

“Original equipment manufacturers that are unable to procure sufficient components to meet orders for their products will feel more pain,” he said.

S&P said the supply issue is most severe in the auto industry.

It added that many carmakers had announced factory shutdowns and prioritised production based on an entity's ability to procure critical parts.

The rating agency said other sectors now also being squeezed include some smartphone manufacturers.

Even some home appliance producers in China are reporting production issues related to chip shortages.

"Our base case is that the spike in demand will ease in the second half of 2021 (2H21), returning the supply chain to an equilibrium.

“However, there's always a chance that demand does not abate or that a fresh supply shock could trigger yet more acute shortages," said Kurz.

S&P said while it anticipates no rating change related to the shortages for now, chip shortfalls will be the major variable affecting revenues and profits of key global entities that it covers for at least the next 12 months.