Semiconductor Supply Continues To Be Tight Chip Shortage May Be An Opportunity

According to Financial Union news, global semiconductor manufacturers are rapidly pushing ahead with preparations to increase production in order to solve the supply shortage. Large semiconductor manufacturers have increased their inventories of raw materials to meet demand, and nine of them recorded a record high in the latest quarter. However, it is increasingly difficult to predict actual demand as customers tend to place more orders than necessary.

According to The Japanese media reported on July 29, the global "chip shortage" is still continuing and maybe alleviated after next year. Semiconductor manufacturing facilities are hampered by a shortage of chips, making it difficult to expand capacity quickly. Semiconductor supply continues to be tight, has affected the automobile, consumer electronics, and other fields, many car companies due to the "lack of core" and production halt or production. Demand leads to price tension, some dealers malicious price increase. Previously, CCTV has approved, "lack of core" is not the reason for "fried core", to curb price illegal behavior, maintain good market prices.

Since 2020, the shortage of core caused by the shutdown and production reduction caused by the epidemic has affected the development of automobiles. We thought that 2021 would be an important turning point, but we never thought that the shortage of core would become more and more severe instead of better. According to reports, car production in the first quarter of 2021 will be more than 600,000 units lower than expected, and the shortage of cores will spread across the semiconductor industry, with Apple, SONY, and others reporting bottlenecks in their products. Initially, in 2021, automobile, mobile phone, security, and other industries will be affected by the lack of core.

The reason for the further expansion of the core shortage dilemma is related to the sudden natural disaster. During this year's Spring Festival, Japan was hit by a 7.3 magnitude earthquake, which damaged semiconductor factories such as Toshiba and Fujitsu. Since then, in our state of Texas due to a rare cold wave of power outages, many semiconductor manufacturers have suspended operations, such as NXP has suspended two plants in the Austin area, while Samsung Electronics has temporarily closed two semiconductor plants in Austin. A series of natural disasters have put further pressure on already tight chip supplies at the start of 2021.

In this context, the market recovery and return to balance still need to wait, the specific time is predicted to be more than half a year. Because semiconductor manufacturing is not suitable for rapid large-scale transfer, production and capacity recovery need to be gradual. While foundry operators including TSMC have announced a capacity expansion to cope with the crisis, upstream and downstream manufacturers will still need to spend months preparing materials and tools, as well as time for subsequent installation and commissioning. Based on this, it will take at least half a year or so to wait for the foundry and packing plant to expand to meet the supply-demand.

This period of time for the development of China's chip market is undoubtedly an opportunity. At present, with the "Made in China 2025" clearly proposing the development of the third-generation semiconductor industry, domestic chip companies are mushrooming and a large number of investment plans are being actively carried out. It is understood that in 2020, there are nearly ten thousand integrated circuit enterprises set up in China, the business scope of the new company includes the semiconductor integrated circuit field. In this context, coupled with the impact of the lack of a core, domestic chip development and application are bound to take a new step, the future is looking forward to.