Global shortage of chips is getting worse, with no sign of supply catching up

nanoguy

Posts: 896   +12
Staff member
In brief: A combination of factors have wreaked havoc on supply chains, with many companies in the tech and auto industry facing a shortage of chips that is forcing them to scale back production and increase prices for end customers.

By now it's no secret that the world is experiencing a shortage of chips as a result of several compounding problems such as a trade war, drought, snowstorms, cryptocurrency mining, not to mention an ongoing pandemic. It also doesn't help that demand for chips has grown to unprecedented levels, driven by digitalization efforts as well as an increasing variety of products that depend on semiconductors for some or all of their functionality. And the situation could get worse before it gets any better.

According to the Semiconductor Industry Association (SIA), global semiconductor sales for the month of January alone were $40 billion, which is a 13.2 percent increase over the same month in 2020. Total sales in 2020 were $439 billion, and China accounted for $151.7 billion of that, while the American market saw the largest year-over-year increase of 19.8 percent. The total figure is expected to rise more than 8 percent this year.

Last year, the pandemic-induced lockdowns forced factories to either close or scale back production, which was only seen as a temporary setback. However, that was quickly proven wrong by the delayed launch of Apple's iPhone 12 lineup and paper launches of new graphics cards from Nvidia and AMD.

Microsoft and Sony both launched new gaming consoles, only to find that they couldn't manufacture them fast enough to meet the demand, which was further exacerbated by scalpers managing to grab large amounts of retail inventory. This is why the two companies have started revising their revenue expectations for the coming quarters.

Earlier this year, automakers found themselves in a similarly difficult position, which prompted a reduction in manufacturing output that persists to this day. Even as chip production in foundries went back to normal, car companies like Ford, Nissan, Volvo, and General Motors have had trouble securing the necessary silicon, and are now projecting billions of dollars in losses this year as a result. As a stopgap solution, some companies are opting to make vehicles without fuel economy modules.

Wafer capacity leaders

Company Monthly wafer manufacturing capacity Total global capacity share
Samsung 3.1 million 14.7%
TSMC 2.7 million 13.1%
Micron Technology 1.9 million+ 9.3%
SK Hynix ~1.85 million 9%
Kioxia 1.6 million 7.7%
Intel 884,000 ~4.1%

Industry insiders recently estimated that demand for silicon would outweigh supply until at least the end of summer, but some did point out that ongoing supply constraints and increased material costs could stretch that well into 2022. TSMC says its semiconductor industry is well prepared to deal with the ongoing drought, but it only accounts for 13.1 percent of the global wafer capacity.

Samsung, who is now ahead of TSMC as the world's leading wafer manufacturer, is nowhere near to being able to satisfy demand for its memory products or for Nvidia's Ampere graphics cards. Just as PC shipments saw the highest growth in ten years, manufacturers are suffering low stock levels at a time when chips, displays, and passive components are harder to come by.

This is all contributing to a steady rise in prices for a number of consumer electronics as their availability dwindles. The Biden administration has stepped in to try and address the problem at the supply chain level, but it's not clear if anything can be done in the short term. The Consumer Tech Association estimates that demand for consumer tech is only going to increase this year, potentially driving retail sales revenues of $461 billion in the US thanks to a renewed interest in smart home products, connected health, and tech that keeps us all connected.

The Semiconductor Industry Association, who represents several industry giants like AMD, Intel, Nvidia, and Qualcomm, believes the Biden administration should prioritize bringing chip manufacturing to the US, an effort that is estimated to cost $50 billion. Last month, the President said he would push for $37 billion towards that goal, while provisions in the most recent National Defense Authorization Act will allow the government to provide billions in incentives for companies that rise up to the task.

Permalink to story.

 

Dimitriid

Posts: 931   +1,720
I guess I'll indulge those who have told me I have too much of a tin foil hat before and float this one around but well it has precedent: Remember when we found out there was some price fixing going on with memory chips?

I just find it hard to believe there was no indicator among many of the industry experts that saw everybody wanted more and more semi conductors that this was looming on the horizon, meanwhile so many chip manufacturers are raising their margins with seemingly no end in sight and every warning article says the same "It's going to get worst"

Yes this is a difficult industry to just scale up at will but as I say, I'm just not buying none of the fabs and none of their clients had any indication this was going to happen seeing how well, it has happened before and these companies mission statement is to make this (Create unprecedented demand for their products) happen for profit.

The simpler explanation fits better: they just did nothing about all the warning signs that there were going to have great supply constrains and let it happen to justify raising prices.
 

moon982

Posts: 67   +17
Wow! They get covid and shut down all the factories and it takes 6 months or more to ramp up to full operation in the factory when they open. How nice.

They should have a huge warehouse to stock pile for 6 months but no they do not operate like that.
 

Neatfeatguy

Posts: 436   +698
Wow! They get covid and shut down all the factories and it takes 6 months or more to ramp up to full operation in the factory when they open. How nice.

They should have a huge warehouse to stock pile for 6 months but no they do not operate like that.

Covid didn't shut down the factories, governments shut them down.

People are constantly told "pandemic induced" or "covid forced" type of phrases to help drive that fear. It isn't covid that is causing things to close, it is the governments that are doing it. They may say their reasoning is due to covid, but that doesn't excuse the governments from single handedly dismantling the entire global economics.

Now as governments are trying to correct their wrongs, they keep using those phrases that can induce fear and keep covid at the front of everyone's mind while they spin things to make it sound like they have the people's best interests in mind.
 

R00sT3R

Posts: 478   +1,312
Rapidly approaching the point (or has it already happened) where I'd actually be able to make a profit on selling my 2080, which I bought in January 2019 for $650.

Insane situation.


 

moon982

Posts: 67   +17
Rapidly approaching the point (or has it already happened) where I'd actually be able to make a profit on selling my 2080, which I bought in January 2019 for $650.

Insane situation.

Yep and give it some time the price of RAM and SSD will go up.
 

BadThad

Posts: 611   +649
Joe Biden is going to fix the problem? LMFAO Sorry, a guy that knows nothing about reality, definitively knows nothing about business, and spent 47 years as a politician is NOT going to fix the problem. If anything, he will make it worse.
 

HardReset

Posts: 1,237   +892
I guess I'll indulge those who have told me I have too much of a tin foil hat before and float this one around but well it has precedent: Remember when we found out there was some price fixing going on with memory chips?
Yeah, that was 15 years ago.

If you mean around 2017, there was no price fixing. It was just normal memory price cycle: prices are too low -> some manufacturers stop selling for loss -> there is shortage -> prices are high -> some new manufacturers start building chips -> there is oversupply -> price are too low ... repeat.

I just find it hard to believe there was no indicator among many of the industry experts that saw everybody wanted more and more semi conductors that this was looming on the horizon, meanwhile so many chip manufacturers are raising their margins with seemingly no end in sight and every warning article says the same "It's going to get worst"

Yes this is a difficult industry to just scale up at will but as I say, I'm just not buying none of the fabs and none of their clients had any indication this was going to happen seeing how well, it has happened before and these companies mission statement is to make this (Create unprecedented demand for their products) happen for profit.

The simpler explanation fits better: they just did nothing about all the warning signs that there were going to have great supply constrains and let it happen to justify raising prices.
Of course there was indicators about that. But what could have done about it? I knew around two and half years ago there will be high end manufacturing capacity shortage around this time. How? Reading that press release: https://www.globalfoundries.com/pre...logy-portfolio-intensify-focus-growing-demand

Around third of "available for all" 7nm manufacturing capacity was set to disappear. Very easy to say what will happen in couple of years.

And WTF should have done about it? Build more fabs? Building new 7nm fab takes at least three years. That easy.
 

Shadowboxer

Posts: 1,717   +1,322
In the U.K. graphics card prices are coming back down. A month ago a 3080 was £2000 on the used market. Today it’s £900-£1100. It’s not far off MSRP. Hopefully this is the beginning of the end of this ridiculous shortage.
 

hahahanoobs

Posts: 3,600   +1,710
I'm borderline embarrassed watching how people are still reacting to this.

You have no choice but to wait. Just like the pandemic. Well, at least there you can follow the guidelines to speed things up. There is nothing you can do about the supply issues.
 

moon982

Posts: 67   +17
Well that new so it looks like US government is making deal with them to have new factories in the US.

But it is going to be like when RAM and SSD had huge shortage but worse this time.

 

terzaerian

Posts: 969   +1,416
I'm borderline embarrassed watching how people are still reacting to this.

You have no choice but to wait. Just like the pandemic. Well, at least there you can follow the guidelines to speed things up. There is nothing you can do about the supply issues.
Because following the guidelines has worked great so far.
 
I think the SIA mentioned here is the Semiconductor Industry Association, not the “Silicon Industry Association”.
 

Mr Majestyk

Posts: 817   +727
How much can I sell my GTX1070 for I wonder? Heck even my Fractal define R4 might get a good price.

Luckily I got all my components for my new PC build at RRP or less, but I did not even bother with current gen GPU or CPU. I'm building 3700x + 2080 Super based system. I only game at 1440p but also do a ton of photo editing and run Matlab and other software for simulations.
 

Dimitrios

Posts: 868   +654
Joe Biden is going to fix the problem? LMFAO Sorry, a guy that knows nothing about reality, definitively knows nothing about business, and spent 47 years as a politician is NOT going to fix the problem. If anything, he will make it worse.

Well said!
 

Avro Arrow

Posts: 1,716   +2,024
TechSpot Elite
"The Semiconductor Industry Association, who represents several industry giants like AMD, Intel, Nvidia, and Qualcomm, believes the Biden administration should prioritize bringing chip manufacturing to the US, an effort that is estimated to cost $50 billion."

Just how would this $50 billion of taxpayer money be used? For $50 billion, the US government could have its own silicon fabs which would have the double role of making a profit for the government (which would make taxes lower) by fabbing on the open market and ensuring a supply of chips for the military and other government agencies. National Security would be a perfect reason why this could be legally done. I sure hope that they're not thinking of just giving taxpayer money to another already-rich corporation when they claim that they can barely help their own people deal with the pandemic (although that would be par for the course, wouldn't it?).
 
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BadThad

Posts: 611   +649
"The Semiconductor Industry Association, who represents several industry giants like AMD, Intel, Nvidia, and Qualcomm, believes the Biden administration should prioritize bringing chip manufacturing to the US, an effort that is estimated to cost $50 billion."

Just how would this $50 billion of taxpayer money be used? For $50 billion, the US government could have its own silicon fabs which would have the double role of making a profit for the government (which would make taxes lower) by fabbing on the open market and ensuring a supply of chips for the military and other government agencies. National Security would be a perfect reason why this could be legally done. I sure hope that they're not thinking of just giving taxpayer money to another already-rich corporation when they claim that they can barely help their own people deal with the pandemic (although that would be par for the course, wouldn't it?).
Seriously? You have WAY too much faith in government. Government is the PROBLEM and not the solution to ANYTHING. The worst thing that can happen is the government get involved as it would make ANY project take years to complete and wrought with cost overruns.

So, you call out these "rich corporations" as if they are evil? When companies prosper they not only provide employment for millions of people but provide the services & products consumers want, need and desire. I guess you'd rather see the government running everything, huh? There's a word for that, it's call communism.
 

OptimumSlinky

Posts: 269   +502
Because the guidelines have caused the worst economic crisis since the Great Depression.
Because we should all just risk sickness and potentially death for tHe EcOnOmY, right?

And the pandemic just ripped off the bandaid. The actual wounds and issues that led to depression were caused by decades of supply-side economic BS pushed by conservatives since Reagan. Notice how Amazon and Microsoft are doing great, but the average American is suffering hard? You reap what you sow.
 

OptimumSlinky

Posts: 269   +502
If I have to explain to you how the health of the economy directly affects people's ability to feed themselves, [REDACTED AS THE MODS WOULD DELETE MY POST]
You do realize that several other G8 nations were able to quarantine and still provide income to their citizens during said quarantine, right? Which led to better outcomes against the virus, less stress, and people not getting evicted or starving.
Do I really have to explain that there is another way, a middle ground between "keep everything open and spread a potentially lethal virus" and "shut people in their homes without any income or means to provide"?