How is Chipageddon affecting you?

[jrs45]

There's nothing beneficial about a 3rd party buying up large quantities of parts which are in short supply, only to sell them on to companies who need them at a significant mark-up. Nobody is better off than they would have been otherwise, apart from the scalper.

I disagree with this; this actually helps prevent shortages by throttling the price to match demand.  Those who really need them, can get them.  Otherwise no one can get them.  However irritating, it does serve a purpose.

The points about authenticity are well taken though.

[AndyC_772]

I'm guessing you've not spent the last month or so trawling every corner of the market trying to put together the kit for a product on which your livelihood depends.

The supply situation is "irritating" just like losing a hand in a table saw is "itchy".

[jrs45]

I'm guessing you've not spent the last month or so trawling every corner of the market trying to put together the kit for a product on which your livelihood depends.

This is what I do every single day, sadly.

The supply situation is "irritating" just like losing a hand in a table saw is "itchy".

The irritation I was referring to isn't the "supply situation", that's incredibly frustrating and a huge time and money sink.  The "irritation" is at the speculators.  The speculators can't be blamed for the shortage.  They are a minor factor, if that.  If they didn't buy them up, someone would have been hoarding them anyway, and they wouldn't be available at any price.

[SilverSolder]

Listening to a radio show the other day, where people from non-electronics related businesses were explaining how they now buy massive quantities of everything, because they can't trust they will get deliveries on time...   the callers were into everything from restaurants to corner convenience stores.

So, it seems everything is choked off.  Supply-constraint inflation, we welcome you!

[Siwastaja]

I disagree with this; this actually helps prevent shortages by throttling the price to match demand.  Those who really need them, can get them.  Otherwise no one can get them.  However irritating, it does serve a purpose.

Nice theory, but I don't buy it. The reason I disagree is, I believe this increases loss. The gray market vendors buy more parts than they can sell. They need to guess which parts to stockpile, and when. Then, when the actual crisis hits, some desperate companies may buy from them, but most will just do whatever they can to avoid that - i.e., redesign.

If they buy $1 parts and sell them for $10 ea, they will make a huge profit even if they waste 70% of the parts. That waste worsens the situation. For many, buying from such sources is simply just a non-option, completely regardless of how much the parts are needed.

[T3sl4co1l]

Nice theory, but I don't buy it. The reason I disagree is, I believe this increases loss. The gray market vendors buy more parts than they can sell. They need to guess which parts to stockpile, and when. Then, when the actual crisis hits, some desperate companies may buy from them, but most will just do whatever they can to avoid that - i.e., redesign.

Probably the situation would be a bit more agreeable if the spread were lower -- which also means the stocking levels kept modest, and the profit margins thinned out.  Which deals with this aspect a bit.  So, you're not going to get that organically -- it has to be by regulation.  (So, for those kind of people that don't believe in regulation: this is a "good" state of things to you, remember!)

It's interesting from an economic standpoint, that, while a price change of even just say 5% might force a design win (sort by price, how can you lose?!), once something's in production, changes over 50%, even 100%, 200% -- are just... noise?  A problem we can blame partly on market segmentation/differentiation, that very few functionally similar (or nearly-compatible) parts are, in fact, fully (package, pin for pin, bit for bit) compatible.  Or even if not bit-compatible, who cares if you just have to change some bits in registers, but changing whole protocols, footprints, etc. takes significant work (PCB rev).  And there's only so much of that we can do up front, even if the customer can budget it up front as well (reduce NRE! reduce time to market!)

So that's another aspect that could be regulated, or somehow else encouraged: increasing the diversity of supply, of compatible devices.  Second sourcing.

But there hasn't been much historical reason to do so, i.e. to force stocking levels, restrict price markups, request/demand 2nd sources, etc.  Well, 2nd sources might be done, on a piecemeal basis, but only by certain customers (does MIL still do that a lot?), not like the broad ranges of products we're talking here.

Also, 2nd sourcing wouldn't actually help in this situation, being that total fab capacity is down.  But circumstances could happen where that applies, too, so, worth noting I guess.

Tim

[TimFox]

A usual assumption in this discussion is that the fabrication capacity is down from pre-plague years, some of which is due to fire or other damage to existing fabs.
Does anyone have quantitative figures for the capacity reduction?

[coppice]

A usual assumption in this discussion is that the fabrication capacity is down from pre-plague years, some of which is due to fire or other damage to existing fabs.
Does anyone have quantitative figures for the capacity reduction?

Capacity should be significantly up on its pre-COVID level. AKM had a fire, depriving the industry of some of the best audio converters, but the shortages mostly relate to demand.

[SilverSolder]

With too much money floating around in the system after years of QE,  some enterprising business people have figured out how to "earn" a return by buying up supplies of pretty much everything, and reselling it at a higher price.

Thankfully nobody has found a way to charge for air...

[SiliconWizard]

You're right, the absurd level of QE has made things a lot worse in that regard.

[AndyC_772]

This is what I do every single day, sadly.

In that case, I commend you for your calmness in the face of adversity. You're taking this much better than anyone else I know, myself included.

The speculators can't be blamed for the shortage.  They are a minor factor, if that.  If they didn't buy them up, someone would have been hoarding them anyway, and they wouldn't be available at any price.

Imagine a couple of different companies, both of whom make $100k/yr from an electronic device that they manufacture.

'A' makes a product for $100, sells it for $200, qty 1000 pcs/yr. It's a consumer product, not particularly critical.
'B' makes a product for $100, sells it for $1100, qty 100 pcs/yr. This product contains a lot of software and must be calibrated, reliable and traceable.

Now imagine that a key component used in both products is in limited supply, say only 500 pcs are available to purchase.

In the absence of an opportunistic reseller stepping in and snapping them all up, there are a couple of possible outcomes. The 'worst' case (in terms of the ability of the electronics industry as a whole to continue generating revenue and keeping their staff and customers happy) is for 'A' to buy them all. They make $50k, and 'B' makes nothing.

A better case is 'B' buys 100, and 'A' gets the other 400. 'B' can now make the full $100k, and 'A' still makes $40k.

Better yet for 'A' would be to buy all 500, sell 100 to 'B' at a hefty mark-up, and use the rest themselves - but that may be very difficult to do, and not worth it, unless they're already also a reputable component distributor which is unlikely.

Add the scalper, and it all goes horribly wrong.

'A' can't afford to pay over the odds for the part at all, and certainly not the 10x mark-up we've been routinely seeing. They're literally better off burning down their factory and using the land to grow potatoes - which is especially unfortunate given that they'd have been able to buy and use most of the available stock whether they get in before or after 'B' has bought everything they need.

'B' can afford more or less any price, but only if the parts are guaranteed new, genuine, original and as-described - which, of course, they now aren't.

There might be an argument for rationing quantities to ensure that everyone gets a reaonable chance of at least being able to buy some quantity of components. This is definitely happening right now too.

[chickenHeadKnob]

GPU prices as a leading indicator for semiconductors?

I am not a gamer and I update my PC very rarely so I don't follow any of those PC enthusiast channels on youtube but they occasionally show up as recommended in my feed. I noticed a few have started mentioning GPU prices and availability are improving. Search youtube "gpu prices falling" on JayZ and similar. Is this a side effect  of something happening in the crypto world or can it be used as a leading indicator for the chip-a-geddon shortage? In the commodity markets I pay attention to the trendline of "Dr. copper" to anticipate the market.

GPUs come off of the high end TSMC fabs and graphics cards also have memory and power bus components.
What sayeth the EEVBLOG forum braintrust?

[Messtechniker]

  I'd rather take delivery times of important
components like 0.1 uF Cs, for example, as the indicator.

[chickenHeadKnob]

I'd rather take delivery times of important
components like 0.1 uF Cs, for example, as the indicator.

Do you understand the meaning of leading and trailing indicators in market predictions? Availability of ceramic caps tells me nothing about what is happening in semiconductor fabs. Likewise in economics improving labor (unemployment) numbers trails the general economy by months. There was a recent past shortage of mlcc's that had nothing to do with availability of other components.

[tom66]

GPU availability is definitely improving.  Out of curiosity I've been subscribed to a Telegram channel advertising when GPUs go on sale and I've noticed an increase in the last few months.  But this as a proxy for the semiconductor market, I'm not sure.

Players like nVidia and AMD will have bought vast swathes of capacity at TSMC.  TSMC is only one supplier of semiconductors and the availability of consumer goods is essential to making providers like nVidia money (their business is significantly consumer-oriented) but less essential for e.g. Xilinx, Microchip, ST, etc. who have large orders already with big customers and while they probably miss some of the revenue from Digi-Key et al. they are not suffering too much without it, unlike the SMEs that can't buy their parts.

[SilverSolder]

GPU prices as a leading indicator for semiconductors?

I am not a gamer and I update my PC very rarely so I don't follow any of those PC enthusiast channels on youtube but they occasionally show up as recommended in my feed. I noticed a few have started mentioning GPU prices and availability are improving. Search youtube "gpu prices falling" on JayZ and similar. Is this a side effect  of something happening in the crypto world or can it be used as a leading indicator for the chip-a-geddon shortage? In the commodity markets I pay attention to the trendline of "Dr. copper" to anticipate the market.

GPUs come off of the high end TSMC fabs and graphics cards also have memory and power bus components.
What sayeth the EEVBLOG forum braintrust?

GPUs for gaming are a discretionary (non-essential) purchase.   There is a limit to how high prices can go before sales start to drop.   They may have found that limit?  (Especially in an environment of generally rising prices.  Something's gotta give, and it will be the discretionary purchases that cave first...)

[madires]

GPUs are a completely different market. Nowadays PC CPUs come with integrated graphics, good enough for most stuff. You'll need a graphics card only for video processing, gaming, general number crunching (e.g. scientific, code cracking), crypto mining and in some cases CAD/CAE. I haven't bought any graphics card in years.

[chickenHeadKnob]

My hypothesis is that GPU's represent premier silicon allocations due to their high profit margin. TSMC preferentially would allocate to these high paying customers like Nvidia before they serve lessor paying ones. If the GPU market is easing up it signals eventual capacity availability to others. If I am correct then we should see it in the summer with actual lead times, rather than buyer go away and call us later.

It is only a hypothesis.

[Ranayna]

One thing should not be forgotten: The next generation of GPUs is coming out soon.
While i cannot even guess how that will really pan out during the current situation, in the past it was normal that the current model gets cheaper even before the next generation is available.

[cortex_m0]

GPUs come off of the high end TSMC fabs and graphics cards also have memory and power bus components.
What sayeth the EEVBLOG forum braintrust?

The thing to keep in mind is that semiconductors are, to a significant extent, non-fungible. There are probably only one or two fab lines in the world that ONSemi has qualified to produce your particular MOSFET, and none of them are in common with anything nVidia or AMD sells. All that means is the odds a relaxation in demand for one part used on a graphics card will bring forward the production schedule the specific parts you need are low.

[coppice]

GPUs come off of the high end TSMC fabs and graphics cards also have memory and power bus components.
What sayeth the EEVBLOG forum braintrust?

The thing to keep in mind is that semiconductors are, to a significant extent, non-fungible. There are probably only one or two fab lines in the world that ONSemi has qualified to produce your particular MOSFET, and none of them are in common with anything nVidia or AMD sells. All that means is the odds a relaxation in demand for one part used on a graphics card will bring forward the production schedule the specific parts you need are low.

A point to note is even if you have two parts produced at different fabs, designed at the same geometry, for the same wafer size, they will still rarely be portable between those fabs, for a variety of reasons. If you develop a part that turns out to be a huge success, arranging that you can run it at additional fabs to scale your output is usually a substantial amount of work.

[MT]

Perhaps related to chipageddon, car cable harnesses is becoming scarce.

[cortex_m0]

I'd rather take delivery times of important
components like 0.1 uF Cs, for example, as the indicator.

You have found an indicator that there are no shortages. 

Just looking at DigiKey, they have over 800 million stock of 0.1 uF ceramic chip capacitors in 0201, 0402 or 0603 case, with nearly all of their normal SKUs in stock (~90%).

[tom66]

A usual assumption in this discussion is that the fabrication capacity is down from pre-plague years, some of which is due to fire or other damage to existing fabs.
Does anyone have quantitative figures for the capacity reduction?

The problem isn't so much a current capacity reduction, it's twofold:

- Many fabs based in Asia shut down during COVID due to government decree, which basically created a massive 'ripple' with fabs running at 100% capacity trying to catch up on a market demanding >100% capacity;
- Automotive and a few other industries cancelled their orders, which led to these guys inevitably joining the back of the queue, but with a lot of money behind them, throwing lower tier customers off any supply.

Additionally, you have increased demand due to home working, more sales of games consoles, graphics cards etc.  And luxury cars did better during COVID than other comparable years, which means increased demand there (though overall car sales did fall somewhat, it was less than expected)

And the shortage created by these factors has then led the market to be driven by panic buying and scalping.

[nctnico]

I'd rather take delivery times of important
components like 0.1 uF Cs, for example, as the indicator.

You have found an indicator that there are no shortages. 

Just looking at DigiKey, they have over 800 million stock of 0.1 uF ceramic chip capacitors in 0201, 0402 or 0603 case, with nearly all of their normal SKUs in stock (~90%).

Likely these are available in large numbers because there are no chips available to use them with