TSMC chairman claims some companies are sitting on chip stockpiles

nanoguy

Posts: 1,021   +14
Staff member
Why it matters: The past year has seen a gradual deterioration of the tech supply chain, to the point where unrelenting demand and a multitude of other elements have made it virtually impossible for industry players to catch up on the supply side of things. There are many factors that led to this situation, but one that has come into focus recently is that some companies are hoarding chips without taking into account the negative effects this practice has on the industry as a whole.

It all started with a shortage of chips that exposed a weakness in the global supply chain -- a strong dependence on China and its neighboring countries for a large chunk of the world's manufacturing capacity for a variety of consumer and industrial products. At one point, manufacturers like Foxconn decried the situation and called for a concerted effort from governments and companies to develop a supply chain that is more resilient in the face of trade wars and major crises.

However, the situation is a lot more complicated than that. Chip foundries like Samsung and TSMC are firing up on all cylinders, but despite their best efforts, the most optimistic timeline for the supply catching up with demand is still 2022-2023. TSMC chairman Mark Liu told TIME Magazine that the company is doing whatever it can to serve all of its customers, and shot down allegations that TSMC is prioritizing one customer over another.

Liu says automakers were quick to point fingers at chipmakers for their $210 billion loss this year, but it's hard to determine exactly where the problem lies. For one, car manufacturers cut back production and reduced their chip orders in February, only to be faced with a surge in demand for their vehicles weeks after that. At the same time, TSMC reallocated some of its capacity for customers it thought were running out of stock.

This move didn't sit well with automakers and several other companies, but Liu said a likely explanation for the complaints is that distributors and middlemen are stockpiling chips. Despite the popular perception that TSMC is catering to Apple more than anyone else, in reality, it was forced to delay orders for valued clients who were deemed to have a healthy amount of stock for their immediate needs, in order to serve other clients who needed chips to stay afloat.

It's not hard to imagine where this is happening the most. At one point, Huawei spent billions on building a two-year stockpile of American chips to stay afloat amid rising trade tensions between China and the US. Other Chinese companies have pursued a similar strategy, but no one knows exactly how many chips they've been hoarding over the past year. What we do know is that China imported a record $35.9 billion worth of semiconductors in March alone to safeguard its local industry against US sanctions or other sources of disruption.

Liu notes the ongoing spat between the two countries isn't benefiting anyone and creates the perfect conditions for the current chaos in the global tech supply chain. TSMC's customers sign contracts for chip manufacturing well in advance, and the current political climate is forcing them to take desperate measures that further exacerbate the problem of chip shortages.

Also looming over the semiconductor industry is a lack of skilled workers, as well as booming prices for raw materials such as silicon and rare earth metals. If anything, it looks like solving the ongoing chip shortage is contingent on the ability of foundries like TSMC, Samsung, and Intel to expand the global manufacturing capacity -- but governments also play a big role in how the industry navigates this process.

Permalink to story.

 

Dimitriid

Posts: 1,337   +2,624
So in other words, price fixing, the thing I've been saying is very clearly going on (But not on an organized manner just in an opportunistic chance at greater profits from thousands of small distributors)
 

envirovore

Posts: 329   +651
TechSpot Elite
I’m not sorry if you lack the knowledge to comprehend my post.
Because a company deciding it'd like to stock up on product to ensure it has enough on hand during a supply shortage when it has to outsource to a third party for that product, which that third party also has to allocate process flow and resources to other customers (some of which will have vastly higher supply issued to them via said third party manufacturer) all has to do with Biden.

Sure.
 
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Squid Surprise

Posts: 4,449   +3,780
This is something that happens in every market whenever there are shortages... When supplies of anything dry up, there will always be those who hoard... it's human nature.

It's basically saying - "fields are getting wet because it's raining."
 

BadThad

Posts: 737   +831
Because a company deciding it'd like to stock up on product to ensure it has enough on hand during a supply shortage when it has to outsource to a third party for that product, which that third party also has to allocate process flow and resources to other customers (some of which will have vastly higher supply issued to them via said third party manufacturer) all has to do with Biden.

Sure.

Biden is a weak and pathetic president, no foreign governments respect or fear him. The Chinese are on the verge of invading Taiwan and the Biden ineptocracy is not defending Taiwan and will not if they are invaded. When it happens, TMSC will become a Chinese company and the Chinese will use that to control the flow of chips.

You've been listening to MSM too much - the problem is REAL and like most ignorant Americans you fail to see it through the democrat cloud of BS.
 

Squid Surprise

Posts: 4,449   +3,780
Biden is a weak and pathetic president, no foreign governments respect or fear him. The Chinese are on the verge of invading Taiwan and the Biden ineptocracy is not defending Taiwan and will not if they are invaded. When it happens, TMSC will become a Chinese company and the Chinese will use that to control the flow of chips.

You've been listening to MSM too much - the problem is REAL and like most ignorant Americans you fail to see it through the democrat cloud of BS.
Assuming the load of nonsense you just spouted is true (please feel free to put some evidence for it in here), please explain how Trump (I assume you are one of his supporters) and his Republicans would have been any different?
 

envirovore

Posts: 329   +651
TechSpot Elite
Biden is a weak and pathetic president, no foreign governments respect or fear him. The Chinese are on the verge of invading Taiwan and the Biden ineptocracy is not defending Taiwan and will not if they are invaded. When it happens, TMSC will become a Chinese company and the Chinese will use that to control the flow of chips.

You've been listening to MSM too much - the problem is REAL and like most ignorant Americans you fail to see it through the democrat cloud of BS.
I don't listen to any media about politics, as frankly I don't really care. I'm not a democrat, nor a republican either.

But it's entertaining to see what baseless assumptions you jumped to.

Edit:
But as we apparently have to get political, a weak and pathetic president is one that cannot renounce white supremacists and neo-nazis killing others in their own country as bad people.
 
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captaincranky

Posts: 17,684   +6,463
Biden is a weak and pathetic president, no foreign governments respect or fear him.
As opposed to the sociopathic, pathological liar, failed businessman, tax evading, diaper wearing Adderal addicred, insurrection inspiring piece of crap that seems to be your hero?

All Mr. ***** did, was was alienate all our allies, and start the trade war with China in the first place.

And right now, he's probably pissing away the contents of your checkbook, plotting another "recount" somewhere, to keep "the big lie" going..

I have been trying to avoid "political trolling", but you've made that quite impossible. (That's what Quora is for, check it out).

Look forward to your post being pulled and mine along with it..

And BTW, Mr **** was the one who chose to negotiate with the Taliban in the first place. At this point, apparently to drop the sh!tpile which was the withdrawal from Afghanistan right into Biden's lap.
 

envirovore

Posts: 329   +651
TechSpot Elite
As opposed to the sociopathic, pathological liar, failed businessman, tax evading, diaper wearing Adderal addicred, insurrection inspiring piece of crap that seems to be your hero?

All Mr. ***** did, was was alienate all our allies, and start the trade war with China in the first place.

And right now, he's probably pissing away the contents of your checkbook, plotting another "recount" somewhere, to keep "the big lie" going..

I was trying to avoid "political trolling", but you've made that quite impossible.

Look forward to your post being pulled and mine along with it..

And BTW, Mr **** was the one who chose to negotiate with the Taliban in the first place. At this point, apparently to drop the sh!tpile which was the withdrawal from Afghanistan right into Biden's lap.

A glance at their avatar tells you all you need to know about them.
 

brucek

Posts: 942   +1,363
I get building up supply reserves, so that you can continue making products tomorrow even if a supply shortage were to occur.

What I less understand is holding back existing reserves today when you are experiencing that supply shortage right now. What's the point of storing food for tomorrow when you're already hungry today?

Put another way, if they have chips they can sell today at current inflated market prices, why hold them back for a chance to sell them at normal market prices tomorrow, or worse risk that a competitor introduces a new product that steeply devalues that supply?

Or, if the specific companies and chips that TSM is alluding to are not the chips that are currently in short supply, then it's basically an irrelevant red herring of a comment, like when parents tell kids to finish their plate in say the US because someone is starving in say Africa. There may be hunger somewhere but that plate isn't movable.
 

Sausagemeat

Posts: 1,054   +874
Because a company deciding it'd like to stock up on product to ensure it has enough on hand during a supply shortage when it has to outsource to a third party for that product, which that third party also has to allocate process flow and resources to other customers (some of which will have vastly higher supply issued to them via said third party manufacturer) all has to do with Biden.

Sure.
What a dumb assumption. I never said “it has all to do with Biden”. That was made up in your head for no apparent reason. Obviously there are other reasons.

Of course it sounds to me like you just didn’t want to hear criticism about a politician. How pathetic..

I’m not even properly American, I have no love for the other guy. But objectively speaking Biden is weak. Let me say it again to get the hairs on the back of your neck to rise. Biden is weak and blatantly suffering from dementure and he should be in a care home.
 

envirovore

Posts: 329   +651
TechSpot Elite
What a dumb assumption. I never said “it has all to do with Biden”. That was made up in your head for no apparent reason. Obviously there are other reasons.

Of course it sounds to me like you just didn’t want to hear criticism about a politician. How pathetic..

So why even bring him up, or make it a political issue to begin with.

I criticize political leaders of all parties all the time, they're all scam artists and nearly none of them (at least the ones in any position to make any actual changes) actually care about you or me. It's all about more money for the political machine.

I don't tend to criticize or bring any of that up here because this is a tech site, and this article has nothing to do with a politics related tech issue, you're the one that brought politics into it.

Haven't seen any sort of actual critical thinking about why a company may want to do such a thing posted from you yet.
And fairly certain starting a comment with "with Biden..." that is indeed laying it at his feet.
Not backing that up and following anything calling it out by failing to provide an actual reason for your statement...well, you're here to troll then I guess?
Which, kudos, I bit.

Fact is that neither you, nor I (nor anyone else except those from companies sitting on stock) knows why.
Difference is one of us attempted to come to a logical conclusion, the other just derped some political crap into the thread.

And you can say all you like about Biden, again, it doesn't bother me. I've got better things to concern myself with than what some rando on a forum thinks of our president.
 
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McMurdeR

Posts: 379   +374
What a dumb assumption. I never said “it has all to do with Biden”. That was made up in your head for no apparent reason.

Check out the first comment this guy posted and read this again! Maybe this guy is the real deal and maybe not, but it sure feels like the troll farms have infested this site. The comments on every single article somehow swing towards American politics.

 

hwertz

Posts: 85   +37
The risks of "Just in Time" manufacturing. Back in the day, it was considered a huge innovation to have a day or two (maybe 1 week max) of parts on hand instead of just having components come in, go into a big warehouse collecting dust for a while until they are eventually used. Well, this is the downside -- if you have any supply chain disruptions your production comes to a halt.

The cautionary tale for this was ADDS corporation -- they made computer terminals and went for just in time manufacturing. Cut costs and improved efficiency -- until severe winter weather disrupted supply chain for about a month. That stopped production, then when they did have all the parts, it took some time to get the finished product shipped out too, it essentially bankrupted them. (How healthy a company could be if one month bankrupted them is another matter... but still.)
 

Markoni35

Posts: 1,318   +534
This plandemic has many effects, many uses, fulfilling many hidden plans. It's like a hack for society. Just like a good phone Troyan, the plandemic uses many exploits to steal global resources. One of the sub-modules is "chip-crisis". I'm not sure who planned this plandemics, but they did a very good job.