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Tag: global Chip shortage

  • Covid-19 surge in Malaysia threatens to delay international chip scarcity

    The Southeast Asia nation is among the world’s high locations for meeting and testing of the units that management smartphones, automotive engines and medical tools. Disruptions in Malaysia threaten to delay uncertainty over chip provide properly into subsequent 12 months, dashing hopes of reduction within the second half of 2021.

    The provide crunch in Malaysia, induced primarily by workers shortages linked to virus-control measures mixed with a pointy surge in international demand, poses a brand new downside for the auto business. For the primary half of this 12 months, shortages largely stemmed from firms miscalculating the tempo of financial recoveries and never ordering sufficient components. Now they’ll’t at all times get the components they want as a result of Covid-19 outbreaks are denting manufacturing unit output.

    “It’s a bit like a recreation of whack-a-mole,” said Ravi Vijayaraghavan, a Singapore-based partner at the consulting firm Bain & Co. specializing in semiconductors. “We think we have supply sorted out, and then a problem suddenly pops up somewhere else.”

    Some of the world’s main automotive makers together with Toyota Motor Corp., Ford Motor Co., General Motors Co. and Nissan Motor Co. have disclosed main manufacturing cuts due largely to chip shortages from factories in Malaysia. Ford suspended work for a few week at an F-150 plant within the Kansas City, Mo., space and a Fiesta manufacturing unit in Cologne, Germany due to lacking components, whereas Toyota mentioned it might lower international manufacturing by round 40% in September. General Motors mentioned it expects to make 100,000 fewer automobiles in North America within the second half of the 12 months.

    The issues in Malaysia stem from the worst Covid-19 surge the nation has seen because the begin of the pandemic. The nation of round 32 million folks has had greater than 1.6 million reported circumstances and 15,000 deaths so far, greater than half of them this summer time.

    On June 1, the federal government imposed a nationwide lockdown to stem the unfold and defend its buckling healthcare system, however it designated electronics firms as important companies and allowed them to function at 60% capability. As vaccination charges picked up, factories had been ultimately allowed to renew full operations, however they’ve been taking part in catch-up ever since and disruptions have endured.

    Even minor disruptions can dramatically shift output and supply timelines. In June, the Malaysian chip maker Globetronics Technology Bhd., which assembles sensors for a U.S. smartphone maker in addition to fundamental automotive elements, voluntarily closed two of its factories for a number of days after three staff examined constructive for Covid-19.

    It took about 4 weeks to normalize deliveries, based on Chief Executive Heng Huck Lee, who had back-to-back calls with prospects as he and his group tried to shuffle round orders with out inflicting a domino impact of delays.

    Mr. Heng mentioned that worker security was his precedence and that manufacturing on the two factories was halted fully for 2 days to sanitize them from high to backside and flush out the air a number of occasions over. Hundreds of staff had been remoted.

    “This wasn’t a catastrophe when it comes to income, however it induced disruption,” Mr. Heng said. “When your workforce is lower, it kind of cascades down the line.”

    Mr. Vijayaraghavan mentioned chip manufacturing depends on a precarious mannequin designed to maintain prices low by holding minimal stock and spreading meeting throughout a number of markets specializing in processes which might be exhausting to relocate in a pinch. “There’s little or no room for error, so every time there’s any disruption you see it right through to the tip product as a result of there’s simply no slack within the system,” he mentioned.

    Malaysia is a serious hub for packaging, a labor-intensive course of of mixing fundamental components into functioning elements and testing them for high quality earlier than they’re shipped overseas and made into end-use merchandise. About 7% of the worldwide provide of semiconductors goes by means of the nation sooner or later, based on the U.S.-based Semiconductor Industry Association. The U.S. imports extra chips straight from Malaysia than from another nation on the earth, the group mentioned.

    Problems in Malaysia began final 12 months amid manufacturing unit shutdowns attributable to the pandemic, although they weren’t as consequential as a result of, on the time, international chip provide appeared extra secure and demand was decrease. But by early 2021, as economies began waking up, shortages had been magnified by hovering demand for all method of units that require the chips. Then got here the surprising blows to 2 business juggernauts: a hearth at a serious plant on the outskirts of Tokyo in March and a drought in Taiwan that slowed the chips’ water-intensive manufacturing in April. Covid-19 circumstances began ticking up in Malaysia across the similar time, compounding the issues.

    The demand has continued to rise. More chips have been wanted for medical units akin to moveable ultrasounds, thermometers and ventilators as healthcare techniques around the globe have rushed to construct capability. Prolonged lockdowns fueled demand for dwelling home equipment and private electronics together with tablets and videogame consoles. Auto makers hoped to grab on an increase in shopper spending as Western economies stepped up vaccinations and emerged from stagnation.

    “Even if you happen to’re operating at 100% capability, provide remains to be not sufficient to satisfy demand, and lead time will improve,” said Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, a business group formed in January in response to challenges caused by the pandemic. The problem, Mr. Wong said, is that demand exceeds full capacity while most factories are still running below their potential. He estimates that pandemic-related capacity constraints translated to hundreds of millions of dollars of “missed opportunities” within the nation this 12 months.

    In idea, Malaysia’s semiconductor sector ought to be operating optimally by late August as employee vaccination charges for many firms attain the 80% threshold required to renew full operations, Mr. Wong mentioned. In apply, manufacturing unit output might be uneven for the following two or three quarters, till your complete nation reaches the next vaccination fee and transmission slows. Malaysia has totally vaccinated virtually 45% of its inhabitants, based on Our World in Data.

    Meanwhile, factories may be compelled to close down quickly due to breakthrough infections amongst vaccinated workers, or they may have sporadic shortages associated to staff being quarantined after coming into contact with an contaminated particular person, even when the employees are totally vaccinated.

    Staff shortages as a consequence of quarantine necessities are a persistent downside not simply on the manufacturing unit flooring, however for staff in associated industries, akin to truck drivers and cleaners. The workers shortages may trigger vital disruptions within the weeks forward, presumably longer, based on David Lacey, president of Frepenca, an business group based mostly in Malaysia’s industrial hub of Penang, the place many semiconductor factories are situated. “We’re beginning to see business capability impacted by employee shortages, and the employee shortages are attributable to quarantine guidelines,” Mr. Lacey said. “We need to keep the rules in sync with the situation, and the rules in place now are the same ones we had pre-vaccination.”

    Chip makers mentioned the state of affairs stays dynamic and might be unstable into subsequent 12 months. A spokesperson for Infineon Technologies AG, a German semiconductor provider that manufactures merchandise in Malaysia, mentioned the corporate expects shortages to persist into 2022, as demand stays excessive and considerably outstrips provide.

    “Today’s semiconductor provide chain is advanced to the diploma that you will have to undergo a number of areas in a number of nations in a number of areas simply to get this one piece, this one tiny a part of your ultimate product,” said Mr. Heng, of Globetronics. “But we’ll figure out a way to overcome this. We’re all still in learning mode.”

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  • AMD says it’s doing ‘everything possible’ to mitigate chip scarcity, has made ‘significant investments’ in provide chain

    American semiconductor firm Advanced Micro Devices, Inc. (AMD) says it’s doing every little thing doable “to drive global semiconductor availability”.
    “We have made significant investments in just about every element of our supply chain to ensure we are not just able to get the supply that we think that we need, but also investing to build additional capacity for our suppliers,” David McAfee, Corporate VP, Product Management and Marketing at AMD informed indianexpress.com in a name from Austin, Texas. “It’s something that has been an enormous focus area,” McAfee added.
    A worldwide semiconductor scarcity of chips has impacted every little thing from PCs and cars to recreation consoles. Global demand for chips, the “brain” inside a wide range of digital merchandise, is much exceeding the availability with the pandemic altering use instances in some ways.
    As one of many world’s main chipmakers, AMD makes processors that energy private computer systems, online game consoles like PS5 and Xbox Series X and knowledge facilities. (Image Source: AMD)
    As one of many world’s main chipmakers, AMD makes processors that energy private computer systems, online game consoles like PS5 and Xbox Series X and knowledge facilities. As the explosive demand in PCs first grew to become seen within the early days of the pandemic, McAfee stated one of many steps AMD took “was to go source more capacity in every step of the supply chain, making investments on a very significant scale globally to ensure that we can drive as much demand for products”.
    Accepting that extra must be accomplished, McAfee stated that whereas the semiconductor scarcity is an impediment, the demand for PCs is past what the worldwide semiconductor business can cater to.

    The pandemic has woken up the PC section that had plateaued for a few years. Since distant work and studying aren’t going away quickly, the demand for PCs from companies, faculties and shoppers is more likely to stay excessive. According to analysis from IDC, worldwide shipments of PCs, which incorporates desktops, notebooks, and workstations, reached 83.6 million models in 2Q21. But the worldwide scarcity of pc chips threatens to decelerate the PC market in its golden second.
    “Prior to the Covid, the PC industry was going through a period of slow innovation,” he stated, including that the pandemic has helped within the explosion in demand for PCs globally. “PCs now are far more premium and far more capable than the world was historically buying,” McAfee stated. “We’ve seen more growth in gaming PCs, for instance, over the past 18 months than we ever would have imagined.”
    While chipmakers like AMD are pushing exhausting to beat the extended scarcity of chips by rising manufacturing, the reality is that constructing new capability takes years. (Image Source: AMD)
    While chipmakers like AMD are pushing exhausting to beat the extended scarcity of chips by rising manufacturing, the reality is that constructing new capability takes years. A chip takes so long as three to 4 months to develop, and it entails a high-tech course of that may solely be accomplished at specialised chip fabs. Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest foundry that counts main expertise corporations similar to Apple, Qualcomm and AMD as its purchasers. The drawback is there are only a few chip fabs on the earth and people too are concentrated in Asia. The US needs to alter that, and is encouraging corporations like Intel, the world’s largest chip maker, to take a position extra in home semiconductor manufacturing. Experts are warning that the worldwide chip scarcity might final till 2023.
    “The job for AMD has been to invest in silicon capacity and manufacturing capacity and every step of the supply chain to drive as many potential suppliers as we possibly can,” he stated. “How do we fill this gap as quickly as possible and make sure all of the pieces are in place to try to sustain the demand that the world has for PCs, because it’s become such an important part of people’s lives today.”

  • How shortages of a $1 chip sparked a disaster within the international economic system

    Hundreds of various sorts of chips make up the worldwide silicon trade, with the flashiest ones from Qualcomm Inc. and Intel Corp. going for $100 apiece to greater than $1,000. Those run highly effective computer systems or the shiny smartphone in your pocket. A show driver is mundane in contrast: Its sole function is to convey fundamental directions for illuminating the display screen in your telephone, monitor or navigation system.

    The hassle for the chip trade — and more and more firms past tech, like automakers — is that there aren’t sufficient show drivers to go round. Firms that make them can’t sustain with surging demand so costs are spiking. That’s contributing to brief provides and rising prices for liquid crystal show panels, important elements for making televisions and laptops, in addition to automobiles, airplanes and high-end fridges.

    “It’s not like you’ll be able to simply make do. If you will have every thing else, however you don’t have a show driver, then you’ll be able to’t construct your product,” says Stacy Rasgon, who covers the semiconductor trade for Sanford C. Bernstein.

    Now the crunch in a handful of such seemingly insignificant components — energy administration chips are additionally briefly provide, for instance — is cascading by way of the worldwide economic system. Automakers like Ford Motor Co., Nissan Motor Co. and Volkswagen AG have already scaled again manufacturing, resulting in estimates for greater than $60 billion in misplaced income for the trade this 12 months.

    The state of affairs is more likely to worsen earlier than it will get higher. A uncommon winter storm in Texas knocked out swaths of U.S. manufacturing. A fireplace at a key Japan manufacturing unit will shut the ability for a month. Samsung Electronics Co. warned of a “severe imbalance” within the trade, whereas Taiwan Semiconductor Manufacturing Co. mentioned it may possibly’t sustain with demand regardless of operating factories at greater than 100% of capability.

    “I’ve by no means seen something like this up to now 20 years since our firm’s founding,” said Jordan Wu, co-founder and chief executive officer of Himax Technologies Co., a leading supplier of display drivers. “Every application is short of chips.”

    The chip crunch was born out of an comprehensible miscalculation because the coronavirus pandemic hit final 12 months. When Covid-19 started spreading from China to the remainder of the world, many firms anticipated folks would reduce as instances received powerful.

    “I slashed all my projections. I used to be utilizing the monetary disaster because the mannequin,” says Rasgon. “But demand was just really resilient.”

    People caught at residence began shopping for expertise — after which stored shopping for. They bought higher computer systems and greater shows so they might work remotely. They received their youngsters new laptops for distance studying. They scooped up 4K televisions, recreation consoles, milk frothers, air fryers and immersion blenders to make life beneath quarantine extra palatable. The pandemic became an prolonged Black Friday onlinepalooza.

    Automakers had been blindsided. They shut factories through the lockdown whereas demand crashed as a result of nobody may get to showrooms. They instructed suppliers to cease transport elements, together with the chips which might be more and more important for automobiles.

    Then late final 12 months, demand started to choose up. People wished to get out and so they didn’t wish to use public transportation. Automakers reopened factories and went hat in hand to chipmakers like TSMC and Samsung. Their response? Back of the road. They couldn’t make chips quick sufficient for his or her still-loyal prospects.

    Himax’s Jordan Wu is in the course of the tech trade’s tempest. On a current March morning, the bespectacled 61-year-old agreed to fulfill at his Taipei workplace to debate the shortages and why they’re so difficult to resolve. He was keen sufficient to speak that interview was scheduled for a similar morning Bloomberg News requested it, with two of his workers becoming a member of in particular person and one other two dialing in by telephone. He wore a masks all through the interview, talking rigorously and articulately.

    Wu based Himax in 2001 together with his brother Biing-seng, now the corporate’s chairman. They began out making driver ICs (for built-in circuits), as they’re recognized within the trade, for pocket book computer systems and displays. They went public in 2006 and grew with the pc trade, increasing into smartphones, tablets and contact screens. Their chips at the moment are utilized in scores of merchandise, from telephones and televisions to vehicles.

    Wu defined that he can’t make extra show drivers by pushing his workforce tougher. Himax designs show drivers after which has them manufactured at a foundry like TSMC or United Microelectronics Corp. His chips are made on what’s artfully known as “mature node” expertise, tools a minimum of a pair generations behind the cutting-edge processes. These machines etch traces in silicon at a width of 16 nanometers or extra, in contrast with 5 nanometers for high-end chips.​

    ​The bottleneck is that these mature chip-making traces are operating flat out. Wu says the pandemic drove such robust demand that manufacturing companions can’t make sufficient show drivers for all of the panels that go into computer systems, televisions and recreation consoles — plus all the brand new merchandise that firms are placing screens into, like fridges, sensible thermometers and car-entertainment techniques.

    There’s been a selected squeeze in driver ICs for automotive techniques as a result of they’re normally made on 8-inch silicon wafers, quite than extra superior 12-inch wafers. Sumco Corp., one of many main wafer producers, reported manufacturing capability for 8-inch tools traces was about 5,000 wafers a month in 2020 — lower than it was in 2017.

    No one is constructing extra mature-node manufacturing traces as a result of it doesn’t make financial sense. The present traces are totally depreciated and fine-tuned for nearly excellent yields, which means fundamental show drivers could be made for lower than a greenback and extra superior variations for not far more. Buying new tools and beginning off at decrease yields would imply a lot increased bills.

    “Building new capability is just too costly,” Wu says. Peers like Novatek Microelectronics Corp., additionally based mostly in Taiwan, have the identical constraints.

    That shortfall is exhibiting up in a spike in LCD costs. A 50-inch LCD panel for televisions doubled in worth between January 2020 and this March. Bloomberg Intelligence’s Matthew Kanterman initiatives that LCD costs will maintain rising a minimum of till the third quarter. There is a “a dire scarcity” of show driver chips, he mentioned.

    Aggravating the state of affairs is a scarcity of glass. Major glass makers reported accidents at their manufacturing websites, together with a blackout at a Nippon Electric Glass Co.’s manufacturing unit in December and an explosion at AGC Fine Techno Korea’s manufacturing unit in January. Production will doubtless stay constrained a minimum of by way of summer time this 12 months, show consultancy DSCC Co-founder Yoshio Tamura mentioned.

    On April 1, I-O Data Device Inc., a serious Japanese laptop peripherals maker, raised the value of their 26 LCD displays by 5,000 yen on common, the largest improve since they started promoting the displays 20 years in the past. A spokeswoman mentioned the corporate can’t make any revenue with out the will increase because of rising prices for elements.

    All of this has been a boon to Himax’s enterprise. Sales are surging and its inventory worth has tripled since November.

    But the CEO isn’t celebrating. His complete enterprise is constructed round giving prospects what they need, so his lack of ability to fulfill their requests at such a important time is irritating. He doesn’t anticipate the crunch, particularly for automotive elements, to finish any time quickly.

    “We haven’t reached a place the place we are able to see the sunshine on the finish of tunnel but,” Wu mentioned.

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  • Fridges, microwaves fall prey to world chip scarcity

    A world scarcity of chips that has rattled manufacturing traces at automobile firms and squeezed stockpiles at gadget makers, is now leaving dwelling equipment makers unable to satisfy demand, in response to the president of Whirlpool Corp in China.
    The U.S. based mostly firm, one of many world’s largest white items agency, is falling behind on exports to Europe and the United States from China, by as a lot as 25% on some months, Jason Ai advised Reuters in Shanghai.
    “It’s a perfect storm,” he stated on the sidelines of the Appliance and World Electronics Expo.”On the one hand we now have to fulfill home demand for home equipment, then again we’re going through an explosion of export orders. As far as chips go, for these of us in China, it was inevitable.”
    The firm has struggled to safe sufficient microcontrollers, easy processors that energy over half of its merchandise together with microwaves, fridges, and washing machines.

    While the chip scarcity has affected a variety of high-end suppliers like Qualcomm Inc, it originated and stays most extreme for mature applied sciences, for instance power-management chips utilized in vehicles.
    The chip scarcity, which started in earnest in late December, was brought about partially as automakers miscalculated demand and pandemic-fuelled gross sales of smartphones and laptops surged.
    It pressured carmakers together with General Motors to chop manufacturing, and elevated prices for smartphone makers corresponding to Xiaomi Corp. And with each firm that makes use of chips in its merchandise panic shopping for to shore up its stockpile, the scarcity has blindsided not simply Whirlpool however different equipment makers too.
    Hangzhou Robam Appliances Co Ltd, a Chinese white items maker with over 26,000 workers, needed to delay the discharge of a brand new high-end range vent by 4 months as a result of it couldn’t supply sufficient microcontrollers.

    “Most of our products are already optimised for smart home use, so of course we need a lot of chips,” stated Dan Ye, advertising and marketing director at Robam.
    He added that the corporate had discovered it simpler to supply chips from China than abroad, prompting it to re-evaluate future provides.
    “The chips we use in our products aren’t the most cutting edge. Domestic chips can satisfy our needs completely.”
    Already cutthroat, revenue margins at white items companies are getting additional squeezed because of the scarcity. Robin Rao, planning division director of China’s Sichuan Changhong Electric Co Ltd, stated prolonged substitute cycles for home equipment, coupled with intense competitors and a slowing actual property market, have lengthy saved revenue margins skinny.
    “But because of these core components and chips, our supply chain capital costs have increased.”

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    To cope with the scarcity of microprocessors and flash reminiscence chips, Dreame Technology – a vacuum cleaner model funded by Xiaomi – minimize its advertising and marketing funds and employed further workers simply to handle relationships with suppliers.
    Dreame has additionally spent “several million yuan” to check out chips that would function alternate options to those it usually makes use of, stated Frank Wang, the corporate’s advertising and marketing director.

    “We’re working to have deeper control of our suppliers, and have even invested in a few suppliers,” he stated.
    (Reporting by Josh Horwitz in Shanghai, extra reporting by Shanghai newsroom; Editing by Sayantani Ghosh & Simon Cameron-Moore)