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Why the world is facing a shortage of chipset

1. Why are chips missing?

There are many, but not all, distractions that can be associated with the epidemic. Here are some of the features:

* The homestay created by coronavirus imposes demands beyond the standards set by manufacturers. Lockdowns have encouraged sales growth for laptops to a record high over a decade. Home appliances, webcams and monitors were confiscated when office work left the office, as well as Chromebooks as school left school. Sales also range from home appliances from TVs to air cleaners, all of which now come with custom-made chips.

* The uncertainty created by this epidemic has led to sharp changes in orders. Car manufacturers that have seen significant reductions in the early days of the emergence look down on how sales will return quickly. They rushed late last year to renew orders but were fired because clothing manufacturers extended out offering smartphone giants like Apple Inc.

* Storage of shares: TSMC executives have stated in their recent salaries that customers have been accumulating more than usual initiatives such as fencing. PC makers began warning of stricter supply of semiconductors in early 2020. Midway through the year, Huawei Technologies Co – a major smartphone and network maker – began collecting items to ensure it survived US sanctions that threatened to cut it off from its major suppliers. Other Chinese companies also followed suit, and imports of chips increased by almost $ 380 billion by 2020 – making up about a fifth of total imports this year.

* Weather: Cold February cold weather in Texas has led to power outages shutting off semiconductor plants assembled near Austin; Samsung was still not fully back online in mid-March.

2. What’s up?

Some businesses are being beaten. The chip shortage is expected to end automotive sales alone this year and delay the production of one million vehicles in the March quarter. Not only cars but perhaps a wide range of heavy chip products from phones to console consoles that can see shortages or price increases. NXP Semiconductors NV and Infineon Technologies AG have both indicated that supply chain issues are widespread. Samsung says in March they expect “significant inequality” to be a problem in their business this year.

Semiconductor Risk

3. Who are the main players?

High-quality logic chips capture the headlines like the most expensive and sophisticated silicon pieces that give computers and smartphones their ingenuity. When you hear about Apple or Qualcomm or Nvidia chips, those companies are actually manufacturers of semiconductors, made in industries called foundries.

* TSMC is leading the industry in production capacity and everyone is now making their way to its door to get the best chips made in its Taiwanese facilities. The company’s global market share is larger than its next three competitors combined.

* Samsung, by all means, a big chipmaker because of its dominance in memory chips, is trying to get into that gold and is developing its production technology to be widely rated as the best option for TSMC. Companies such as Qualcomm Inc. and Nvidia Corp. have turned to Samsung.

* Intel Corp., the last US champion in the industry, still has more money than any other chip maker but its market is more focused on computer processors. Product delays have put it at risk for competing designers who are taking part in using TSMC.

* TSMC and Samsung face smaller competitors including Globalfoundries, China Semiconductor Manufacturing International Corp (SMIC) and United Microelectronics Corp of Taiwan. But those rivals are at least two to three generations behind the TSMC technology. Famous names such as Texas Instruments Inc., International Business Machines Corp. and Motorola have gone out or stopped trying to keep up with the most advanced production.

Disaster Mode

4. What happens in this race?

The two Asian giants spend a lot of money to strengthen their governance: TSMC raised its fiscal spending in 2021 to $ 28 billion from a record $ 17 billion last year, while Samsung set about $ 116 billion. in ten projects designed to capture its main rival Taiwan. But China is pushing hard to catch up. It is intended for years to reduce its reliance on the US. technology, especially on chips. Trump’s administration’s efforts to curb Chinese technology giants – by blocking Huawei’s access to chips and curbing American investment in players such as SMIC and Xiaomi Corp. – proved that fear. But the world has a long way to go. For example, in the automotive sector, China has developed a number of chip manufacturing companies in recent years but is still unable to make the advanced chips needed in modern cars. In March, China also pledged to increase spending and conduct research on edge chips as part of its five-year economic plan. While details may not be available for months, SMIC has already announced $ 2.35 billion plant plans with funding from the Shenzhen government. It aims to start production by 2022 and eventually produce 40,000 12-inch chips per month. (In 2019, the TSMC sent about 12-inch advanced chips.)

5. What about elsewhere?

Given the difficulty in developing high-end jewellery skills, governments have hung incentives for anyone to build or expand high-quality buildings on their premises. President Joe Biden in February ordered a review of the government’s list of critical assets including chips. His administration, which includes a long-term chip supply program, will play a key role in building tax incentives for the proposed $ 12 billion TSMC plant in Arizona and the $ 17 billion one Samsung is looking at, possibly in Texas. And the European Union is considering building a higher semiconductor factory in Europe with potential help from TSMC and Samsung, as part of the goal of doubling chip production to 20% of the world market by 2030.

6. Why are chips so difficult to compete with?

Chipmaking is a large-scale business that requires unbelievable clarity, as well as making huge long-term bets in a rapidly changing field. Chips are made from plants that cost billions to build and equip. They should use the flat-out 24/7 to recoup their investment. But that is not all. The yield, or the number of good chips per batch, determines the success or failure. It takes years of knowledge and experience to achieve a 90% yield on the complex photolithographic process used to make chips. Just imagine Ford Motor Co. happy to lose one of 10 cars But poultry makers, who make millions of chips in a process that takes three to four months to complete, succeed when they hit that mark. The photographic base raises a large amount of water and electricity and is at risk of very small disturbances (either from dust particles or distant earthquakes).

7. Who benefits from chip battles?

Even small improvements in semiconductors can bring significant savings in power and cost if repeated on a full scale for something like Amazon Web Services Inc. As 5G mobile networks expand and raise the need for heavy video streaming and game streaming and more people working at home, the need for new silicon, efficient and powerful will only grow. Another way to measure chip sensitivity is called line-widths, or distances between circuits. The current rate on advanced chips is 5 nanometers, or billionths of a meter, about one hundred thousand of the width of a strand of hair. TSMC and Samsung are working on 3nm mass production by 2022. The rise of artificial intelligence is one of the driving forces behind chip manufacturers: AI relies on massive data performance. Highly efficient or energy-efficient designs are also becoming a critical issue given the so-called internet of things – the universe of smart devices or connected from the worst phones to the brightest switches and refrigerators – is expected to boast chip usage exponentially in the coming years.

8. How does Taiwan fit into all of this?

The democracy of the island has emerged as an industry link because of TSMC and the entire environment focused on high technology. American, European and Japanese car manufacturers are appealing to their governments to help with the chip crunch, in which Taiwan and TSMC are being asked to intervene. Those ambassadors show how the TSMC’s chip-making capabilities have given Taiwan political and economic power in a country where technology exists and they have entered into a major power struggle between the US and China – a disagreement that could not be found under Biden’s administration.

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