CN
EN
When will the chip shortage come to an end?
If your iPhone, PlayStation 5, or new car you've ordered has been delayed in the past two years, blame it on a global chip shortage.
The problem began last year, when the COVID-19 pandemic, factory closures, high job demand for household gadgets, and a range of other factors such as the US-China trade war caused gadget manufacturers and car companies to fumble with the chips they needed to produce big.
This has led to delayed shipments and feature cuts for Apple, BMW, Sony and Nissan.
The chip shortage in 2021 continues and is not over yet. In this story, we'll take a look at what companies, industry experts, and analysts have to say about this issue in 2022.
It's been a bad year for gadget manufacturers. Apple said it lost more than $6 billion in the three quarters ended September. The loss in the third quarter also exceeded $3 billion. Xiaomi had flat quarterly revenue in September due to chip shortages.
According to a report by Canalys, smartphone shipments fell 6% year-over-year in the third quarter of 2021.
In October, Intel CEO Pat Gelsinger said that the chip shortage could continue into 2023. That doesn't sound good at all.
Some other chipmakers disagree. Earlier this month, Nvidia's CFO Colette Kress said the company expects GPU supply to improve in the second half of 2022.
Currently, the GPU shortage is so severe that some retailers are zipping up the PC display cases they display in their stores to prevent components from being stolen. We certainly don't want this trend to continue.
Qualcomm CEO Cristiano Amon shares a similar sentiment and believes the issue will be resolved sometime next year.
iPhone supplier Foxconn also said that the chip shortage problem could continue until mid-2022. As a result, your iPhone 13 order may be delayed.
Navkendar Singh, head of research at hardware market analysis firm IDC, said that while the smartphone market will recover in the middle of next year, the PC market may face some problems:
Modern chips built on 4nm, 5nm, and 7nm technologies are not facing production issues. But traditional chips using 10nm or 14nm technology are difficult to manufacture. This is why the growth of the PC industry has slowed down.
The global PC market saw a 5% year-over-year growth rate in the third quarter of 2021 compared to double-digit growth in the previous five quarters. This can be attributed to the strong demand for home workstations during the pandemic slowdown.
While individuals may not be looking for a new PC or laptop as often, the corporate sector will make up for it when employees return to the office, Singh said.
One of the gadget industries that has been severely affected by the chip shortage is gaming. Mat Piscatella, executive director of NPD Group and consultant to the video game industry, said U.S. hardware sales fell 10% in November compared to last year.
According to a report by The Verge, Nintendo, Sony, Microsoft and Valve are all declining in sales, while being unable to keep up with demand due to chip shortages. They think gamers will face this setback again next year.
Automakers are one of the biggest victims of the chip shortage. Several analysts and industry leaders point out that the automotive industry will face supply issues until 2023.
In its first quarterly report after its IPO, Volvo said revenue fell 7% year-over-year, although the situation improved.
Nissan boss Makoto Uchida warned that chip shortages could significantly hinder the company's future plans. In November, BMW said the problem had forced the company to cut features such as touchscreen functionality and parking backup assistant.
In September, even Elon Musk highlighted supply chain issues for Tesla models.
IEEE Life Fellow Tom Coughlin said older chip designs are one of the main reasons the automotive industry is facing a shortage of semiconductors:
The chip shortage will limit the manufacturing of light vehicles until 2023. This is due to the increasing use of chips in modern vehicles, and the growth of electric vehicles has created additional demand for automotive electronics, especially since long design cycles have led to many qualified chips using older semiconductor processes that are not supported in large manufacturing facilities built around more modern process nodes.
One of the reasons the automotive industry is facing this shortage is that due to the pandemic, they reduced orders in 2020 but later reordered some supplies as demand increased.
Willy Shih, a professor of business administration practice at Harvard Business School, said this ordering model poses problems for automakers and chipmakers:
The problem now is that double ordering is exacerbating the shortage. Chipmakers hate adding capacity on old nodes that are frequently used (and less costly) because these areas are not particularly profitable and the cost of excess capacity is brutal. Therefore, until recently, there may have been underinvestment and limitations in increasing capacity.
Some chipmakers have announced new investment plans and promised to build new facilities, but this is difficult to solve in the short term.
In October, TSMC said it would open a factory in Japan to use old technology to meet demand. However, the plant will begin producing semiconductors in 2024. Earlier this year, the Taiwanese company pledged to invest $100 billion over the next three years to increase production capacity.
Earlier this week, Intel pledged to invest $7 billion to open a new factory in Malaysia. In March, the company announced a $20 billion fund to set up manufacturing facilities in the United States.
Companies are also experimenting with new materials and technologies, including gallium nitride (GaN) for semiconductors and photonic materials for chip internal processing. But we may have to wait a while to see these in the wild and reduce our reliance on old technology.
Wayne Lam, senior director of research at CCS Insight, said that while the situation is improving, there are still some manufacturing challenges ahead:
Significant investment in new silicon fabs will begin in late 2022 or early 2023 with capacity increases. However, risks remain. For example, the industry may return to full capacity for silicon manufacturing, but not packaging capabilities, which is little known throughout the chip supply chain.
