The global chip shortage is either very good or very bad for business depending on which side of it you’re on. Computer maker Hewlett Packard (HPE) is on the wrong side of it. In its last earnings report, HP fell short of sales estimates. The miss wasn’t for lack of demand, however, as HP was simply unable to get the semiconductor chips it needed for its computers. The company is trying to taper expectations, estimating it will continue to miss sales estimates so long as the chip shortage persists.
On the other hand, business is booming for Broadcom. The chipmaker beat analysts’ expectations in its recent earnings report thanks to the explosion in demand for its product. However, Broadcom is being careful not to get ahead of itself. CEO Hock Tan indicated the company is only filling a certain portion of its orders. Tan and his team believe that current demand is unsustainable and that filling every order they receive now could lead to a crash in demand later.
why it matters
By sacrificing current sales to avoid a demand glut in the future, Broadcom is allowing competitors like Qualcomm (QCOM) and Nvidia (NVDA) to get ahead in the short term. Time will tell if Broadcom's strategy pays off.