Global chip ‘thirst’

The shortage of semiconductor chips is getting worse and more persistent after 4 months, affecting the technology giants such as Apple, Samsung Electronics …, and even became the main topic in the industry. political and diplomatic relationship between the parties.
From a miscalculation

Semiconductor chips are an important component of modern electronics that can be found in thousands of products used every day, including cars, computers, smartphones and medical devices … These chips are the brains of all electronic devices, performing functions ranging from repetitive tasks like memory and microprocessors, to complex tasks like intelligence. artificial and high-end graphics. Semiconductor chips, which have a relatively low price, have suddenly become a scarce commodity. Jordan Wu, co-founder and CEO of Himax Technologies Co., told Bloomberg: “I’ve never seen anything like this in the past 20 years, since the company was founded. Every industry lacks chips ”. President Joe Biden with the chip model in a press conference at the White House, before signing an executive order to prevent a shortage of semiconductor supplies with the US economy, on 24/2. Photo: REUTERS The global chip crisis is believed to have been rooted in a miscalculation when the Covid-19 pandemic broke out last year. With the epidemic spreading from China to the globe, many companies predict that consumers will reduce the time spent using technology equipment. However, when “stuck” in the home, consumers begin to buy more technology devices: Add laptops so their children can learn from afar; buy a handheld game machine, an oil-free fryer, a blender … to make life less boring. There has been a comparison to call the Covid-19 epidemic “a prolonged Black Friday event”.
Meanwhile, car manufacturers were also affected by the pandemic. They were forced to shut down factories during a period of social isolation, when demand declined because customers were unable to visit stores. They ask suppliers to stop shipping components, including chips, which are increasingly essential to cars. By the end of last year, consumers started going out but restricted the use of public transport. Automakers reopened and turned to chipmakers like TSMC (Taiwan), Samsung (South Korea), and of course had to wait in line. Chip makers have been unable to accommodate soaring demand for their very loyal customers.
The shortages are aggravated this year, due to a series of disruptions. For example, the Japanese Renesas Electronics chip factory caught fire, the drought in the “country of the chip” Taiwan (China), and the cold spell in Texas (USA) caused the factories of Samsung, NXP Semiconductors and Infineon there to temporarily stopped working. “Everything right now is no different from hell,” said Frank McKay, CPO of Jabil – a company that buys billions of dollars of chips each year to assemble products for customers including Apple, Amazon, Cisco Systems and Tesla – to speak. Every day, Frank said, his company faced a shortage of about 100 components and had to negotiate as hard as possible to get it.
The difficulty of manufacturers
Limited supply of semiconductor chips is not a new issue, but what has happened is often related to specific chips. Consumers around the globe now compete fiercely for a cheaper chip made in old factories, when it is a fact that these factories are difficult to upgrade.
For example, the supply of integrated microchips for automotive systems is particularly in short supply as they are typically manufactured on 8-inch wide silicon (wafer) discs, instead of more high-end 12-inch panels. But no company builds more production lines because they are not profitable. Sumco Corp – one of the leading wafer manufacturers, has reported production capacity of an 8-inch equipment line to be around 5,000 panels a month by 2020 – less than in 2017. The purchase of new equipment and Starting with lower productivity means producers’ costs go up.
Meanwhile, the US, Japan and Germany – the world’s largest car makers – are making moves to put pressure on major chipmakers in Asia, forcing them to prioritize chip lines. In-car use up above the needs of other customers, which include smartphone and computer makers. The governments of these three countries fear that the car industry will slow down, or even cut production due to lack of chips, threatening domestic jobs and economic recovery after the pandemic. However, according to insiders, the political pressure to force chipmakers to prioritize demand from carmakers only exacerbates the realities of the supply chain.
“We have to renegotiate with a number of customers and at the same time have to respond to requests from the government to prioritize the production of chips used in the car manufacturing industry, which plays an important role. “This is in contrast to before, when chip manufacturing on a first come first served basis”, said Mark Liu – Chairman of TSMC.
Just a bubble?
The technology war between the US and China, which took place before the outbreak of the Covid-19 pandemic, is also believed to have had negative effects on the supply chain. As Washington imposed restrictions on China’s Huawei Group’s access to key US technologies, it increased stockpiling of components as much as possible. Many other Chinese companies, which fear they will fall into the same situation, do the same way Huawei has. The result has spiked demand for chips and components.
On April 12, Huawei directly blamed the United States for indirectly causing a global crisis, arguing that Washington’s sanctions on Chinese technology companies have caused love. “panic procurement” of components and chips, causing supply chain disruptions. “Apparently unreasonable US sanctions against Huawei and other Chinese companies have created a component shortage across the industry, and this could completely cause a crisis. global ”- said Eric Xu – Huawei’s rotating chairman.
However, companies are still uncertain about the current “thirst” for chips. For them, great demand comes from a series of hedge orders, stockpiling efforts or even the determination to take market share from competitors, thereby creating the “semiconductor chip bubble” on market. TSMC President Liu acknowledged that most customers want to order more than twice as much as they need to minimize the risk of supply chain disruptions caused by geopolitical tensions.
“The current strong demand won’t last forever, because buyers won’t buy five phones or five cars at a time. I worry that there will be adjustments when one of the big players in the industry takes action, and orders will start to decline, ”a leader in the chip supply chain told Nikkei Asia. “I’ve never seen anything like this in the last 20 years since the company was founded. Every industry lacks chips.” – Co-Founder and CEO of Himax Technologies J ordan Wu