The semiconductor shortage is sure to last until 2022 after the chip supplier to some of the world’s biggest tech companies said production would struggle to meet growing demand for its products.
In an online conference this week, TSMC CEO Dr CC Wei said that TSMC’s foundry’s production capacity was still insufficient to meet demand for its chips, especially orders for components used. for High Performance Computing (HPC) systems and 5G devices using 5nm Process Nodes.
The company’s other process nodes, which are heavily used in automobiles, IoT and server equipment, are also stretched according to Taiwanese newspaper United Daily News. Although TSMC is not as big as Intel in terms of revenue, it has a much more diverse customer base since its chips are used by companies like Apple, AMD, Qualcomm to manufacture everything from networking equipment to iPhones and cards. graphics.
If TSMC is stretched over its most important process nodes, then many more industries will be impacted by the limited capacity than if Intel were faced with the same production constraints that affect the more “traditional” IT market more than anything. something else. .
In fact, even Intel is starting to contract with TSMC to manufacture various chips and itself is starting to manufacture chips for other companies like Amazon and Qualcomm in an attempt to meet the global demand for semiconductor components.
However, the only way to alleviate the chip shortage will be to build more foundries to increase capacity, as the demand for this most essential component of modern technology will only increase in the future as life continues to grow. everyday life will be digitized, from smartphones to smart cities.
Dr Wei also told the conference that the company plans to begin mass production on its 2nm process node in 2025, and the company earlier this year inaugurated a new foundry in Arizona based on its process. 5nm, which is expected to be completed in 2024.
Rival semiconductor maker Samsung, meanwhile, is in negotiations to invest $ 17 billion in a second semiconductor smelter in Texas, in addition to increasing investment in its current plant in Austin to increase capacity. .
Intel is expected to spend around $ 20 billion to build two new foundries in Arizona and recently signed a contract with the US Department of Defense to bolster the capacity of the company’s most advanced node, the 18A, which it plans to build. start using in production from 2025.
The shortage of crisps will never go away, here’s why
While most industry professionals will tell you that they expect the chip shortage to last until 2022, it could leave the impression that by 2022 the chip shortage is going to end and that you can finally buy a PS5 or better. graphics cards that are anything but vaporware right now.
That’s not quite what they say, however, since companies put conditions at a certain point in time to plan their business strategies, production, and inventory. Considering the number of variables involved in such financial modeling, you really can’t get that far before your numbers get unreliable. That’s what CEOs and the like mean when they say the chip shortage will last until 2022.
This means that in 2022, they could all show up at conferences to say that the chip shortage will last until 2023 or 2024, and honestly, that’s what’s going to happen unless the new reality that this shortage is. of chips is not at all a shortage, but a systemic deficit sets in.
Chip foundries take years to build, so a number of new factories that will be commissioned in four years will do everything to meet the demand for chips as it exists today. And as anyone who owns a cell phone that starts to degrade in performance after a few years can tell you, just because TSMC or Samsung made the chip that makes your phone work today, doesn’t mean they’re happy with it. your request, at least not permanently.
Every two years, those foundries are going to have to make all the new chips to power your next phone, and the next. On top of that, they now also have to manufacture the chips that run your new Wi-Fi 6 router, your Nest Hello doorbell, and your car.
They are also going to have to manufacture the chips to meet the demands of all the new customers they buy in parts of the world that have been neglected over the past twenty years in the countries of the South and in many parts of Asia that are. start to see a booming consumer market for these products.
And that’s just consumer electronics, we’re not talking about all the new network infrastructure we’re going to need for the delayed rollout of 5G and then 6G when it hits the road.
Demand is only increasing and its growth is likely to be more exponential than linear. Increasing the number of manufacturing plants will not be enough to keep pace as we need to multiply the number of factories.
On top of all that, you have a physical supply chain that can disrupt production capacity at any point along the way, which we are seeing even with the recent port crisis in the United States. All the while, demand may slow down, or even level off a bit, for a while, but it will never start to drop suddenly in a way that could allow production to catch up.
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