Manufacturing giant warns that global chip shortage could last into 2023

[midian182]

Forward-looking: It’s the news none of us wanted to hear: Flex, the world’s third-biggest electronics contract manufacturer, says that the current chip shortage could last until 2023. The warning is the most depressing timeframe we’ve seen so far; some in the industry have predicted the situation will improve by the end of this year, while others say the issues will be resolved in 2022.

As reported by the Financial Times (via 9to5Mac), Flex’s chief procurement and supply chain officer, Lynn Torrel, said the manufacturers it relies on for semiconductors are pushing back their forecasts for when the chip shortage crisis will end.

“With such strong demand, the expectation is mid to late-2022 depending on the commodity. Some are expecting [shortages to continue] into 2023,” she said.

Everyone knows the nightmarish situation consumers are dealing with right now. Pandemic-induced unprecedented demand and supply chain disruption, cryptominers, and scalpers have created a perfect storm of problems in which getting hold of electronic goods and hardware such as graphics cards has become almost impossible, especially at the MSRP. It’s led to chaotic scenes like this at retail outlets when restocks do arrive.

The automotive industry has been hit particularly hard by the chip shortage, especially Ford, Chevy and Jeep. Apple is predicting shortages of its latest iPads and MacBooks, smart TVs could be impacted, and grabbing a PlayStation 5 and Xbox Series X is as difficult now, if not more so, as when the consoles launched last year.

RTX 3080 Ti MSRP: $1,200

What everyone wants to know is, when will the crisis end? There are plenty of contrasting views. TSMC believes it will last through to 2022, as does Acer, MarketWatch and Sony, though the gaming giant “hopes” supply will improve in the second half of the year. AMD, which has been forced to prioritize high-end chips over budget offerings, thinks the situation will improve near the end of 2021.

Given that Taiwan’s drought has exacerbated the chip shortage, the hard truth is that it’s going to be quite a while before things get back to normal, but the thought of waiting until 2023 to buy a new graphics card, at MSRP, is certainly a depressing thought.

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https://www.techspot.com/news/89976-manufacturer-warns-global-chip-shortage-could-last-2023.html

 

[Dimitriid]

And once we're pushing past 2023 they'll go "Nope ups, late 2024 we'll get this resolved!" and just keep kicking the ball down every time you price fixing ghouls.

Let this be an example to whomever thinks markets should be fully unregulated and that the free market would address this issues: it's so easy to take any excuse to manipulate supply and demand and inflate prices it's not even funny, unless of course you find these news items "funny"

 

[Puiu]

This is getting ridiculous. 2023 is pushing it too much.

 

[Aranarth]

And once we're pushing past 2023 they'll go "Nope ups, late 2024 we'll get this resolved!" and just keep kicking the ball down every time you price fixing ghouls.

Let this be an example to whomever thinks markets should be fully unregulated and that the free market would address this issues: it's so easy to take any excuse to manipulate supply and demand and inflate prices it's not even funny, unless of course you find these news items "funny"

BTW all of the chip makers are running at capacity or beyond.
some of them have even reopened old plants that can produce simpler chips using older tech.

When a manufacturer is running at 110% capacity there is not much more you can ask of them.

 

[Achaios]

The "chip shortage" is bringing record profits for a whole host of people, companies and third parties.

It is too much of a boon for it to go away just like that.

There are way too many commercial entities that don't wan this "shortage" to ever end at all and in fact some have taken to crafting new "shortages" ex nihilum, as it happened with the memory & SSD shortages caused by Chia.

It's a new trend for profiteering that will be with us for a looooong time so long as companies profit out of it.

 

[Watzupken]

The "chip shortage" is bringing record profits for a whole host of people, companies and third parties.

It is too much of a boon for it to go away just like that.

There are way too many commercial entities that don't wan this "shortage" to ever end at all and in fact some have taken to crafting new "shortages" ex nihilum, as it happened with the memory & SSD shortages caused by Chia.

It's a new trend for profiteering that will be with us for a looooong time so long as companies profit out of it.

The market is to some extend driven by supply and demand. While many companies are making record profit from this "shortage", the price cannot continue to increase without killing demand. In fact if you look at prices of hardware like GPUs now, the exorbitant prices have actually put a hard brake on demand from gamers. Only people with deep pockets and miners won't mind paying that much for a good GPU. And with mining slowing down and Nvidia introducing cards that are gimped for mining, you can see scalpers listing getting stuck longer and in some cases, I do observe some price cut.

In short, demand and supply will eventually level out as high prices will dampen demand. If one managed to get a GPU now, if the next gen is also plague with high prices and low supply, its possible that he/she may skip that upgrade.

 

[Scrye74]

Since companies are bound to set prices and whatever they think they can get for their products, I guess anything they set could be called "price fixing." Begging for regulation of prices is dangerous, period. If you don't like the prices, don't buy the products.

The system will balance itself eventually. If there is enough profit then others will jump in to share in those profits by producing similar products. Competition will inevitably bring prices down. As it ALWAYS has.

 

[Dimitriid]

BTW all of the chip makers are running at capacity or beyond.
some of them have even reopened old plants that can produce simpler chips using older tech.

When a manufacturer is running at 110% capacity there is not much more you can ask of them.

Yes there is a lot more that we can ask for them: Foresight.

This increase in order doesn't comes out of nowhere: companies have to reserve space months or even years in advance to even get anything on these fabs so it's not like a rush of devices blindsighted them: the knew for a while they had to do a very, very significant expansion of production capacity.

They just didn't, because why should they pay for that expansion in preparation to demand they can clearly see steadily increasing for years if they can just delay it until there's a tremendous backlog and they have 0 risk to their investment and an almost instantaneous ROI?

Stop assuming that a shortage is actually bad for them: it is not it's actually great to almost eliminate their risk and let them dictate prices to the market basically as they see fit.

As I said originally: it's very easy to manipulate demand if you know what you're doing. If your company has enough tech to produce chips in the nanometers range then you can't fool me and say they don't have sufficient tech to do even a minor trend analyzis that would immediately show this situation looming over the horizon since like 2017 or 2018.

 

[duckofdeath]

BTW all of the chip makers are running at capacity or beyond.
some of them have even reopened old plants that can produce simpler chips using older tech.

When a manufacturer is running at 110% capacity there is not much more you can ask of them.

They could have been honest about availability a year ago. Or even better, two years ago. Access to production isn't bought with an hour's notice. They got greedy and just took orders from everybody while knowing they couldn't deliver half of it.

 

[Watzupken]

They could have been honest about availability a year ago. Or even better, two years ago. Access to production isn't bought with an hour's notice. They got greedy and just took orders from everybody while knowing they couldn't deliver half of it.

I feel the supply issues stem from the start of worldwide COVID 19 lockdowns. The lockdowns globally resulted in,
1. Huge spike in hardware demand by every company, school and individuals
2. At the same time, the world's factory (China) is lock down for 3 to 4 months, which means no supply of components and parts at all
3. Subsequent lockdown of countries further impacted supply chain and also freight/shipping

So when things started to pick up 6 months into the year, there is a lot of supply catch up to do. To add to the problem, people still can't travel, so with more disposable income, they turn to buying luxury products. In my opinion, it is not because TSMC or Samsung is greedy and took in too much orders resulting in them not being able to fulfil them. Its because they were caught by surprise, just like any one of us or any companies. We always think that every day is going to be pretty much the same, but that is obviously not the case. It is like me asking you if you actually predicted or foresee this pandemic to hit us 2 years ago.

 

[duckofdeath]

The market is to some extend driven by supply and demand. While many companies are making record profit from this "shortage", the price cannot continue to increase without killing demand. In fact if you look at prices of hardware like GPUs now, the exorbitant prices have actually put a hard brake on demand from gamers. Only people with deep pockets and miners won't mind paying that much for a good GPU. And with mining slowing down and Nvidia introducing cards that are gimped for mining, you can see scalpers listing getting stuck longer and in some cases, I do observe some price cut.

In short, demand and supply will eventually level out as high prices will dampen demand. If one managed to get a GPU now, if the next gen is also plague with high prices and low supply, its possible that he/she may skip that upgrade.

That is a true fact, but has nothing to do with what TSMC have done the last couple years.

 

[Theinsanegamer]

They could have been honest about availability a year ago. Or even better, two years ago. Access to production isn't bought with an hour's notice. They got greedy and just took orders from everybody while knowing they couldn't deliver half of it.

Because tsmc knew in mid 2019 that in 2020 demand would triple overnight and retailers like Newegg would be experiencing black Friday level sales for 10+ months straight.

Why didn't they hire you for your 20/20 future sight?

And once we're pushing past 2023 they'll go "Nope ups, late 2024 we'll get this resolved!" and just keep kicking the ball down every time you price fixing ghouls.

Let this be an example to whomever thinks markets should be fully unregulated and that the free market would address this issues: it's so easy to take any excuse to manipulate supply and demand and inflate prices it's not even funny, unless of course you find these news items "funny"

If y'all want to complain about "muh capitalism" (said capitalism being the only reason you have these products to buy in the first place) you should have an argument better then "tell the truth" or "regulation". Like what kind of regulation would have prevented this? You just expect foundries to maintain 3x their capacity just in case the west wants to shut their economy down again? Then you'll be whining about how expensive your GPUS are because now you're paying for multiple foundries to sit idle for years.

Demand is insane for many products. That's what happens when you inject trillions into your economies of the world and shut everyone into their homes for 6+ months.

All this because some gamers can't play the latest bing bing wahoo. Give me a break.

Edit: also, LMFAO at the capitalist economies of the world being "unregulated". Yeah, sure, try opening a business today and tell me there's no regulation. The closest you will find to a unregulated market is ironically china, but even there local beuracrats have regulations on how you may operate your business.

 

[Aranarth]

As I said originally: it's very easy to manipulate demand if you know what you're doing. If your company has enough tech to produce chips in the nanometers range then you can't fool me and say they don't have sufficient tech to do even a minor trend analyzis that would immediately show this situation looming over the horizon since like 2017 or 2018.

Of course they do trend analysis! They were expecting a 20-30% y/y growth.
Then covid happened and made their forecasting incompatible with reality.

Regular orders on the books a year or two ahead of time got cancelled and then the resulting excess capacity got bought by other people. Then those orders that got cancelled were reordered but the capacity had already been sold to someone else and now you have the current **** show. If the original orders had not been cancelled but had been stock piled instead we would be in a better place. If is not the chip makers fault it is the the fault of the people who panicked and cancelled their orders in the middle of pandemic and now suddenly need those chips after all. (OOPS!!)

Your understanding of the current situation and how we got here needs some serious work.

 

[Dimitriid]

Of course they do trend analysis! They were expecting a 20-30% y/y growth.
Then covid happened and made their forecasting incompatible with reality.

Regular orders on the books a year or two ahead of time got cancelled and then the resulting excess capacity got bought by other people. Then those orders that got cancelled were reordered but the capacity had already been sold to someone else and now you have the current **** show. If the original orders had not been cancelled but had been stock piled instead we would be in a better place. If is not the chip makers fault it is the the fault of the people who panicked and cancelled their orders in the middle of pandemic and now suddenly need those chips after all. (OOPS!!)

Your understanding of the current situation and how we got here needs some serious work.

If the capacity was sold to someone else, then that someone else still has that capacity and still has those products ready.

The capacity mostly didn't went away by what you're saying so one companies loss due to scaling back was picked up by another company.

Yet we're not talking about "Some companies will lag behind as their efforts to scale back up after the pandemic might present challenges" The story is "Nobody will get anything done until 2023 when we can finally normalize!"

This means that companies with a greater control of the entire supply chain all the way through basically have a monopoly. That would be mostly just Apple.

So is the quiet part then "Nobody but Apple will get their supply chain back to normal until 2023?" I think that's certainly plausible but you would think that it's on the best interest of fabs to not take blame that doesn't corresponds to them and would position this as "If companies didn't comunicate with partners and analyzed their supply chain well that's not *our* doing, now you have to wait for Apple to be done with whatever they want to do"

 

[Toju Mikie]

I told myself that if my GTX 1070 dies, I'll have to just suck it up and buy a new gaming laptop in the meantime. This situation is similar but worse than the last crypto mining frenzy with because of the pandemic added and supply shortages everywhere. Back then it was cheaper to purchase a prebuilt or a gaming laptop than to build your own PC.

I've also considered going to console gaming instead, but the PS5 and Xbox Series X/S are overpriced right now, and even looking at the previous consoles, the PS4 Pro and Xbox One X, the prices are higher than normal as well. The only reasonably priced console right now seems to be the Nintendo Switch.

If I don't want to spend a lot of money right now, then it would be the Switch, but I'll have to buy some games as well which will raise the cost, or I could buy a cheap gaming laptop. I saw a Dell G3 with 1650 Ti and i7-10750H for $700. That's probably best case scenario until GPUs start to go down in price again.

 

[Watzupken]

I told myself that if my GTX 1070 dies, I'll have to just suck it up and buy a new gaming laptop in the meantime. This situation is similar but worse than the last crypto mining frenzy with because of the pandemic added and supply shortages everywhere. Back then it was cheaper to purchase a prebuilt or a gaming laptop than to build your own PC.

I've also considered going to console gaming instead, but the PS5 and Xbox Series X/S are overpriced right now, and even looking at the previous consoles, the PS4 Pro and Xbox One X, the prices are higher than normal as well. The only reasonably priced console right now seems to be the Nintendo Switch.

If I don't want to spend a lot of money right now, then it would be the Switch, but I'll have to buy some games as well which will raise the cost, or I could buy a cheap gaming laptop. I saw a Dell G3 with 1650 Ti and i7-10750H for $700. That's probably best case scenario until GPUs start to go down in price again.

Options are limited. If you want to stick to PC gaming, you either get a pre-built system or a gaming laptop just as you mentioned. Consoles are hard to get and the likes of PS5 are being targeted by scalpers due to higher demand. So prices ain't looking good too, even though its still a lot better than buying a GPU now. For my case, I decided to go with a gaming laptop considering I was able to purchase a gaming laptop with a Ryzen 5800H and RTX 3080 mobile for less money than buying a RTX 3080 from scalpers, and just a little top up from buying a RTX 3070 from scalpers as well.

 

[Aranarth]

If the capacity was sold to someone else, then that someone else still has that capacity and still has those products ready.

The capacity mostly didn't went away by what you're saying so one companies loss due to scaling back was picked up by another company.

Yet we're not talking about "Some companies will lag behind as their efforts to scale back up after the pandemic might present challenges" The story is "Nobody will get anything done until 2023 when we can finally normalize!"

This means that companies with a greater control of the entire supply chain all the way through basically have a monopoly. That would be mostly just Apple.

So is the quiet part then "Nobody but Apple will get their supply chain back to normal until 2023?" I think that's certainly plausible but you would think that it's on the best interest of fabs to not take blame that doesn't corresponds to them and would position this as "If companies didn't comunicate with partners and analyzed their supply chain well that's not *our* doing, now you have to wait for Apple to be done with whatever they want to do"

You are still forgetting that covid caused major supply chain disruption in every area of manufacturing and not just IC chips. EVERYTHING.

And it is not that no body will get anything done till 2023 and then we will try to normalize, it is that we are trying to normalize NOW and the projected end date of this process is 2023!

Consider the ship stuck in Suez canal. The disruption of that event is still ongoing and will finally clear the books around the end of the year for those affected. But the ship is no longer blocking the canal you say! Yup but the affects of that hiccup will be felt for a long time in the supply chain. Now compound that to shipping everywhere and manufacturing everywhere being affected to the extreme for 3 months and with continuing disruptions on and off for the next year.

We are already starting to positive results of trying to normalize. AMD CPU's are no longer sold out all the time. Computer OEM's do have graphics cards even if newegg and amazon does not. Heck Dell was able to build me a computer in 3 weeks two months ago with a Radeon 6800xt when you could not find one in stock anywhere. Same is true for nvidia graphics card like the 3080.