August 19, 2022



Chip scarcity: The shortage of “chips to make chips” is exacerbating the scarcity by one other 2 years

The worldwide trade affiliation reckons that the chip scarcity will final “at the least till the tip of subsequent yr”, after which the market must steadiness the provision and demand.SEMI’s President additionally reckons that it’s crucial to make sure chips for semiconductor manufacturing gear wanted to increase capability.Common lead time for gear producers has elevated from three to 4 months to 10-12 months.A complete of 92 fabs are within the pipeline globally, till 2024, and oversupply is ‘positively a priority’, a SEMI’s skilled shared.For a short second between the tip of final yr and the start of this yr, it felt just like the worst was over with the worldwide chip scarcity. In any case, with all the power expansions and ramping up of manufacturing, the provision and demand would inevitably steadiness out. However then geopolitical tensions broke out, a brand new Covid variant got here, inflicting one other wave of circumstances and lockdowns, and the provision chain had been choked once more. Now, we’ve got 92 fabs within the pipeline, with inadequate chips for manufacturing gear wanted to increase capability.The results of that? One other two years of chip scarcity, longer lead occasions, and loads of provide and demand balancing to do. SEMI, a world affiliation of firms concerned within the electronics design and manufacturing provide chain, believes that the dearth of semiconductor which was initially triggered by the pandemic, has now turned extra difficult as a result of lack of instruments required to make chips.President and CEO Ajit Monacha described the continuing concern as advanced, emphasizing that the restoration must begin by addressing the toolmakers of those chips. “Now, we’re confronted with a much bigger drawback the place toolmakers want chips to assist develop their capability. They want chips to make extra chips,” he informed reporters in the course of the SEMICON Southeast Asia 2022 held at Penang, Malaysia.Worse but, the unsettled Russia-Ukrainian battle is including “extra gasoline to the hearth”, Ajit described, primarily as a result of the supplies wanted from Ukraine, equivalent to neon and palladium, amongst others, can’t be sourced as a lot elsewhere. Russia controls as a lot as 44% of the worldwide palladium provides, whereas Ukraine produces a major 70 % of the worldwide provide of neon — two crucial uncooked supplies wanted for chip making.For contact, these chips are crucial in virtually all different industries from vehicles to cellphones, shopper electronics and lots of others. As such, Ajit who at present sees no backup plan from the trade, believes that any backup nonetheless will take months to kick in.So many fabs, so little chipsDuring a presentation on the SEMICON gathering, Ajit shared that there are at present 92 new fabrication crops anticipated to be operational worldwide within the subsequent few years, primarily to cater to surging demand for semiconductors. Contemplating how these crops will take years of constructing earlier than it goes up and working, Ajit doesn’t see the chip scarcity easing earlier than that.He highlighted that the first concern for the trade continues to be the dearth of chips crucial for toolmakers to fabricate chip making machines. “We now want chips to make chips and we’ve got been main the decision for the trade to prioritize toolmakers,” he stated. “The elemental drawback of (the) capability concern is to get instruments and (for) instruments, they want chips to make a number of chips,” he added.Briefly, Ajit reckons that gamers inside the provide chain must come collectively to unravel the conundrum. “What we’re doing to assist at SEMI is to attempt to carry all the worth chain collectively, to create consciousness, to encourage data sharing the place we may be clear with one another so the issue may be solved. This can hold folks transferring ahead with what they want,” he stated.Whereas many consultants had beforehand forecasted the provision state of affairs to have steadily improved this yr, geopolitical conditions introduced one other blow to the trade. Now, even semiconductor gamers don’t see the state of affairs easing anytime quickly — largely till 2024. For Ajit, by 2024, with extra capacities, the gamers will lastly have the ability to steadiness the provision to the mounting demand.From chip scarcity to oversupply?Knowledge compiled by SEMI that exhibits the 92 whole fabs between 2020-2024 contains 200mm and 300mm fabs. For 200mm, 25 fabs and expansions are anticipated; 5 in America, three Europe/Mideast and 17 in Asia. With 300mm, there are 67 fabs (new and expansions) anticipated, whereas seven are within the US, eight in Europe/Mideast, and 52 in Asia.Contemplating that the chip trade is a cyclical sector, the present interval of constant shortages suggests there will likely be a interval of oversupply sooner or later sooner or later, SEMI’s VP of the company advertising and market intelligence teams Sanjay Malhotra highlighted. Talking to Tech Wire Asia on the sidelines of SEMICON SEA 2022, Sanjay stated “an oversupply is inevitable, the smarter ones would swap off (enlargement), and balancing will happen. SEMI estimated in June final yr that building on near 30 new fabs will begin by the tip of 2022. In September it predicted international semiconductor gear funding for front-end fabs, the place the silicon wafers are processed, will likely be almost US$100 billion subsequent yr, after topping US$90 billion in 2022– each data. This can mark a “uncommon three consecutive years of development that started in 2020, bucking the historic cyclical development of a one- or two-year enlargement adopted by a yr or two of tepid development or declines,” SEMI stated. On prime of the unprecedented confidence to increase capability, governments around the globe have dedicated to spend billions of {dollars} to increase semiconductor manufacturing inside their very own borders — measures designed to guard in opposition to provide chain disruptions like these brought on by the pandemic, and to cut back reliance on manufacturing in Taiwan.Asia stays the keyDeloitte in a report has highlighted how Asia Pacific is the world’s greatest marketplace for semiconductors, accounting for 60% of worldwide semiconductor gross sales. “Pushed by authorities help, huge market and growing R&D spending, China, Japan, South Korea and Taiwan collectively have change into the “Massive 4” semiconductor gamers in Asia Pacific, holding 4 of the highest six spots by total semiconductor and every having a number of international semiconductor giants.”Malaysia, the place SEMICON Southeast Asia happened this yr, performs many “back-end” operations equivalent to chip packaging and testing. The area’s premier gathering of the semiconductor and microelectronics trade, underscores the importance of the Electrical and Electronics (E&E) trade each in Malaysia and the broader SEA area. Malaysia’s semiconductor trade is generally concentrated in an island-state, Penang, which can be dubbed the Silicon Valley of the East. To place into context the importance, Penang, which represents 80% of the nation’s contribution to international backend semiconductor output, has additionally accounted for over 5% of the world’s semiconductor gross sales over the previous couple of years, in keeping with Malaysian Funding Improvement Authority (MIDA).Themed “Ahead as One — Constructing A Resilient and Sustainable Electronics Provide Chain in Southeast Asia”, the three-day occasion that happened final week introduced collectively trade consultants for crucial insights into the semiconductor ecosystem, new enterprise alternatives and collaboration. It was attended additionally by all types of gamers within the trade like Micron, Western Digital, World Foundries, Utilized Supplies, Intel, and lots of others.Drawing greater than 10,000 attendees, SEMICON Southeast Asia hosted the 2 themed pavilions, two international pavilions, keynote displays and a number of expertise boards, addressing key traits and points within the electronics manufacturing provide chain. Business consultants additionally mentioned Malaysia’s function within the semiconductor’s provide chain along side the nation’s fiftieth anniversary of its electrical and digital trade.Taking into consideration how the semiconductor trade is likely one of the most resource-intensive on the planet, sustainability subjects occupied a good bit of the three-date gathering. Business consultants mentioned practices to cut back the environmental affect of their companies and manufacturing operations.Apparently, extra semiconductor gamers are seeing the significance of enhancing the vitality effectivity of chipmaking gear, contemplating how expansions are transferring at a fast part.

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