The supply chain problem in the global technology industry is rapidly turning into a demand problem, which may be contrary to market expectations.

Morgan Stanley said in his research report released on April 12 that the shortage of chips caused car companies to lower their production expectations.But the sharp decline in demand for traditional consumer-oriented products-personal computers, smartphones and consumer hardware-could lead to a supply glut crisis.

The situation is completely different from that of a year ago, when more than 90 per cent of end markets were in short supply, compared with less than 19 per cent of markets where supply constraints still exist.

With the easing of the supply chain, delivery time is shortening, and as demand reaches its peak, the bargaining power of contract manufacturers is weakening.

The supply chain crisis is alleviating.

Supply chain problems will not disappear overnight, but all signs are that the "darker switch" will become brighter and supply will return to normal.

By tracking some key indicators, Morgan Stanley found thatThe tension in the supply chain that has lasted for more than a year has been alleviated.

The delivery time is being shortened. The latest survey of manufacturing (global PMI) and supply chain (ISM) shows that the supplier delivery time index reached its worst level since 1974 earlier this year and is now falling.

Container traffic jams are easing.The number of ships moored at US ports waiting to be unloaded reflects the backlog and bottlenecks. The port congestion index has fallen from a peak of 9.2 million TEUs in October 2021 to 88300 TEUs in early April. Global container rates began to fall from a record in September 2021 and have since fallen by 13 per cent, mainly due to a decline in rates on the Trans-Pacific eastbound route, the main sea route from China to the US.

The pricing power of contract factories is weakening.。The bottleneck of the traditional contract factory supply chain has been solved, and prices have stopped rising as the balance of supply and demand normalizes.

Demand is weakening.

On the other hand, demand from consumers and businesses began to relax, so that the tight supply of parts and components finally got some relief.

Morgan Stanley pointed out that if the COVID-19 epidemic is brought under control in the future, with the recovery of some service industries, the demand for science and technology goods may gradually decline.

In the first quarter of 2022,This decline has begun to occur in consumer technology goods.。As demand undergoes "self-regulatory normalization", the pressure on the supply chain may be reduced.

Manufacturers have been eager to restock in response to an unprecedented rebound in demand in 2021, a urgency that has peaked in the past month, with inventory levels in most industries higher than their long-term average before the supply chain crisis.

The supplement of the supply side and the decline of the demand side will eventually lead to the "bullwhip effect".

Bullwhip effect refers to the demand distortion in the upper reaches of the supply chain, from retailers to wholesalers and manufacturers, because the difference in orders may be greater than the difference in sales.The bullwhip effect may come from a sudden drop in demand, as unsalable orders for the consumer portion of many technology products have been filled, but consumer demand is likely to be cooling.

All in all, many parts of the technology industry are likely to experience previous shortages and become oversupplied throughout 2022.