He says the surge in demand for high-tech products caused by working from home, the boredom shutdown, and the shift to e-commerce has only continued, much to the surprise of many. David YoffeHe is a Harvard Business School professor who previously served on the Intel Corporation’s board of directors.
Chip makers didn’t appreciate the scale of continued demand until about a year ago, Yoffe says, but they can’t run a dime. New chip-making plants cost billions of dollars and take years to build and equip. “It takes about two years to build a new factory,” Yuvi notes. “And the factories got a lot bigger, a lot more expensive, and a lot more complicated as well.”
This week, Sony and Taiwan Semiconductor Manufacturing Company, the world’s largest contract maker of chips, She said They will invest $7 billion to build a fab plant capable of producing older components, but it won’t start making chips until the end of 2024. Intel Corporation It is also investing in many new cutting edge off-the-shelf products, but it won’t be available online either until 2024.
Yoffie notes that only one company, ASML in the Netherlands, manufactures extreme ultraviolet lithography machines needed to make high-end chips, and ASML can’t produce machines fast enough to meet demand.
Another problem is that not all chips are created equal.
Simple components—power control integrated circuits, microcontrollers, sensors—became a major pressure point. These devices are much simpler than the CPUs and GPUs used in smartphones and game consoles and are made using older manufacturing methods that require less complexity. But they are found in almost every electronic product, from microwave ovens to medical devices and toys.
Josh Pucci, Vice President at Sources, which matches buyers of electronics components with sellers. IC Insights says lead times for such ingredients have been extended from 4-8 weeks to 24-52 weeks. The shortage of these devices increases the demand for the elderly who are hard to find wafer making equipment.
Gartner estimates that semiconductor foundries were operating at 95.6 percent of capacity in the second quarter of 2021 compared to 76.5 percent in the second quarter of 2019. This effectively means that the factories are overshot, says Gartner analyst Gaurav Gupta. Some downtime needed. for maintenance.
Tom Caulfield, CEO of chip maker GlobalFoundries, He said in October that his company was sold until 2023. CFO of Analog Devices, making some components in high demand, He told the investors In August, his company’s order book stretched at the time into its next fiscal year, which began this month.
Part of the challenge for chipmakers is that some customers may “order twice”, or buy more components than they need if supply runs dry, distorting the picture of future demand. “It’s a lack of location fueled by double demand that’s making matters worse,” he says. Willie Shih, a Harvard University professor who studies manufacturing and global supply chains.
Analysts say companies that make these chips may be reluctant to invest in new plants because the chips carry meager profit margins and because the industry has a reputation for being cyclical, with a rise in demand followed by sharp declines. They fear a future glut of chips that will drive prices lower.