Global chip shortage is not going to get better any time soon - The UpStream

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Global chip shortage is not going to get better any time soon

posted Saturday Apr 17, 2021 by Scott Ertz

A global chip shortage has been affecting product production and availability for nearly a year now. For those who had hoped that perhaps the fabrication plants might be getting close to having a handle on the problem, we've got some bad news. According to executives at all of the major foundries, we can expect these shortages to stay around for years.

The semiconductor bottleneck

The majority of major chip manufacturers use semiconductors produced by one foundry: Taiwan Semiconductor Manufacturing Co. (TSMC). The company produces for brands like Apple, Broadcom, Nvidia, and Qualcomm (though not exclusively) - none of whom have any chip fabrication capabilities internally.

This means that any delays at TSMC will mean major delays for products from these companies. And we have seen exactly that, with shortages in videocards from Nvidia, and chip shortages from Qualcomm. Even Apple's ability to source display technology has been affected.

The timeline to normalcy

TSMC says that they expect these delays to continue well into 2023. This delay comes because the company is already running its operation at over 100% of capacity. Producing a new facility to improve performance is not easy, as it can take years to build a facility and months to configure a new line.

So, two full years of technology at a near standstill, all because we rely on a single manufacturer for many of our chip components. And the company's affect will be far and wide in those two or so years. 45 percent of the company's revenue comes from smartphone component manufacturing and 35 percent comes from high-performance computing components. So, mobile and stationary computing are in trouble.

Automaker GM recently announced that it would have to idle some of its factories because of the shortages. While changes were made to the plans, it is still a dark situation for the automaker. Though they believe they have solved the problem in the near-term to get back up and running, the long-term effects are still murky.

The competition is stuck

But, if you were hoping to avoid the problems by switching form AMD (for whom TSMC manufactures the 7nm silicon) to Intel, who manufactures its own silicon, there is some equally bad news. Intel has also famously been affected by their own semiconductor manufacturing slowdowns. It's part of the reason why the company's chips are still not running at 7nm, while AMD has been there for a while.

New Intel CEO Pat Gelsinger recently told The Washington Post,

We do believe we have the ability to help. I think this is a couple of years until you are totally able to address it. It just takes a couple of years to build capacity.

The conclusion

Whether you're making them yourself or outsourcing the components, producing semiconductors is a challenge right now. And, w're going to be feeling the pressure for the next few years. So, if you were hoping to get a new Xbox Series X or PlayStation 5, patience is going to be of the utmost importance.

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