What's actually "chip shortage"?

[coppice]

Well, to me this all looks more than obvious now that it's an artificially generated crisis. Until now, everything should have been stabilized IF they wanted.

btw. here is the strategy of EU, pretty fresh document https://www.bruegel.org/wp-content/uploads/2021/07/PC-2021-17-semiconductors-.pdf

So you think its quick and easy to add fabs that cost billions each, and require teams of highly skilled people? You also think people will be delighted to spend those billions when every large surge in demand is followed by a bad slump, long before any new capacity has been amortised?

[David Hess]

I think there were major customers who thought they could eat their cake and have it to look at.  They wanted just in time delivery, with someone else eating the cost of inventory.

[nardev]

Well, to me this all looks more than obvious now that it's an artificially generated crisis. Until now, everything should have been stabilized IF they wanted.

btw. here is the strategy of EU, pretty fresh document https://www.bruegel.org/wp-content/uploads/2021/07/PC-2021-17-semiconductors-.pdf

So you think its quick and easy to add fabs that cost billions each, and require teams of highly skilled people? You also think people will be delighted to spend those billions when every large surge in demand is followed by a bad slump, long before any new capacity has been amortised?

At the moment, i'm pretty frustrated because i can't find LAN8742/LAN8740 chips. And they are in plans for ~75 weeks. So popular, so simple and doesn't require sophisticated procedures for manufacturing.

To me it's not obvious why such chips are not available. I can't understand that.

[ataradov]

To me it's not obvious why such chips are not available. I can't understand that.

Manufactures don't continuously produce parts. They do runs on multiple wafers for the predictable near future demand and already placed orders. Then store those wafers and package them as needed into the final parts.

Then production is switched to something else. There was no demand or placed orders for your parts, their slots were allocated to other parts, so now your parts are at the end of the queue.

For some rarely used, but still active ICs there are parts shipped now that were made more than 5 years ago. They will have recent date code, since date code indicates time of packaging, not the source material.

[nardev]

Well, to me this all looks more than obvious now that it's an artificially generated crisis. Until now, everything should have been stabilized IF they wanted.

Who are "they"? Semiconductor companies? They don't want to "fix" it, they are working as normal based on what was ordered. All new orders went to the end of the queue.

You need to understand that 52 week factory lead times were normal even before the crisis. You just were always observing the other end of that pipeline, because distributors managed their orders well, and there was no interruptions. But once you interrupt it by cancelling orders, you are in for a long wait.

There is nothing artificial about it.

Well, ok, another thing i bothering me.

Why are so many popular, not so sophisticated chips to manufacture out of stock?

When i read those policies, it's very clear that there is a “technological cold war” going on.

USA/EU have pretty clear instructions (i'm not saying that there is anything wrong about that) to protect IP, increase investments, build fabs, protect technologies, keep the tech gap 2 generations apart from China etc.

In my understanding, in order to do that, it takes, time, money and it will also have to impact the cost as they will probably reduce export to CN (reduce a profit as a consequence), yet go into an investments. So, my expectation is that making this "out of stock" maneuver is not spontaneous market reaction but also buying time for some changes that should come.

I don't see any rushing to supplement the "out of stock" parts.


You are right, even in the strategy that i shared here, they claim that it's every 4-5 year cycle of parts being delayed or slowed down in manufacturing. However, i think that we have new political situation which fuels it more than purely technological reason.

[ataradov]

Why are so many popular, not so sophisticated chips to manufacture out of stock?

Same reason toilet paper was out of stock. Everyone who uses those chips decided to go and buy 1-2 year worth of demand, just in case. There was not enough free stock available to support that demand. Sophistication of the chip has nothing to do with this.

I don't see any rushing to supplement the "out of stock" parts.

Why would there be rushing?  IC vendors would be interested if the lines were down and nothing was being made and money were lost. But the ICs are made, just the ICs that were actually ordered.

You are frustrated, and that frustration translates into some paranoia.

[nardev]

Why are so many popular, not so sophisticated chips to manufacture out of stock?

Same reason toilet paper was out of stock. Everyone who uses those chips decided to go and buy 1-2 year worth of demand, just in case. There was not enough free stock available to support that demand. Sophistication of the chip has nothing to do with this.

I don't see any rushing to supplement the "out of stock" parts.

Why would there be rushing?  IC vendors would be interested if the lines were down and nothing was being made and money were lost. But the ICs are made, just the ICs that were actually ordered.

I wrote that 2. reply and you posted another in the meantime.

You are frustrated, and that frustration translates into some paranoia.

Also, there was no reason for an insulting addition. I was expressing my opinion about some global things, you gave some pretty logical and i believe, probably true explanations. Differing in opinion doesn't need to end like this.

I'm completely ok with the circumstances, i don't bite my nails because of this. I have plenty other things to do in my life. I'm here to discuss, ask, express my opinion.

[coppice]

Well, to me this all looks more than obvious now that it's an artificially generated crisis. Until now, everything should have been stabilized IF they wanted.

btw. here is the strategy of EU, pretty fresh document https://www.bruegel.org/wp-content/uploads/2021/07/PC-2021-17-semiconductors-.pdf

So you think its quick and easy to add fabs that cost billions each, and require teams of highly skilled people? You also think people will be delighted to spend those billions when every large surge in demand is followed by a bad slump, long before any new capacity has been amortised?

At the moment, i'm pretty frustrated because i can't find LAN8742/LAN8740 chips. And they are in plans for ~75 weeks. So popular, so simple and doesn't require sophisticated procedures for manufacturing.

To me it's not obvious why such chips are not available. I can't understand that.

The chip is largely irrelevant. Its the processes that matters. If you can't get the part you want for a long long time, it probably means someone else has a part using the same process, but with a better profit margin. They can bid more for the wafer capacity both they and your vendor need. Occasionally its a limitation in packaging capacity, but that's usually just for very specialised packages. If you need a ceramic package, so many are made by Kyocera they can be a horrible bottleneck, even when you chose a device with multiple sources. Its usually wafer capacity limits, though.

[nardev]

I'm very glad for all the replies. This community is amazing.

[EPAIII]

I think one thing that is not being realized here is that an IC for a Ford automobile is not a generic part like a 74xxx or a 40xxx. It is a custom design for Ford and even if the fabrication facility was to make and store extra ones for future use, they could not sell them to anyone except Ford. This is called a proprietary part and it can not be sold on the open market. It would be illegal to sell it to GM or Volkswagen or any other auto company or any other company of any type. They could not even sell them to individuals.

So if Ford does not order that IC, then it can not be sold. And the fabrication facility has only one way of knowing how many Ford will use. That is called an ORDER. And it is up to Ford to order them in a timely manner. If Ford guesses wrong, then Ford has to wait.

I think the COVID thing upset the thinking at many levels in many companies and the net result is the economy is now upset. Things will settle down, but it will take time.

[madires]

Selling a proprietary part to a third party isn't illegal, but it would be a breach of contract in case there's such a provision in the contract.

[Trader]

FYI:   The Impact of Chip Shortages on the Electronics Industry

Start Time: Friday September 17, 2021 - 8:00 AM EDT

In this Industry Tech Days Keynote, we have an all-star panel of industry experts to talk about the ramifications of the global chip shortage and what lessons we can learn from them. You'll hear from Dave Doherty, President and COO of distributor Digi-Key Electronics, Steve Sanghi, Executive Chair of semiconductor manufacturer Microchip Technology, and Michael Knight, Corporate Senior Vice President of Business Development of distributor TTI.

This keynote session will be followed by a Q&A with the audience.

https://www.allaboutcircuits.com/tech-days/summer-2021/digi-key-eletronics-microchip-technology-and-tti/webinars/itd-2021-keynote-industry-panel-global-chip-shortage/

[rstofer]

So many interesting facts and opinions but it looks like my "theory" confused you. It's more speculation and in the domain of political economy

 <So, my theory is that all the information about chip shortage is probably partially true but at the same time protectionism propaganda in order to motivate and shift manufacturing capabilities from China "back to USA/EU"?

Does anyone else see it that way?>

Not really...

It would not be in China's interest to throttle production and encourage chip suppliers to build more fab capacity in the US.  No doubt they are pissed that trade secret laws are being enforced and they can't simply copy and paste everybody else's chips.  I don't know the ratio of capacity between China and Taiwan but I believe TSMC (Taiwan) is the largest foundry in the world.

The magic is primarily created in the US, China and Taiwan simply provide manufacturing capacity.  The thing is, it might cost $10-$50 billion to build a competitive plant.  The only way that makes sense is if a lot of chip manufacturers get together to create a joint venture.

And, so, Intel is getting into the foundry business in the US by building 2 plants for $20 billion:
https://www.industryweek.com/technology-and-iiot/information-technology/article/21159119/intel-to-spend-20-billion-on-two-new-us-chip-plants

At one time, the NSA was a huge manufacturer of in-house semiconductors.  Thirty years or so ago, National Semiconductor ran their plant(s).  I didn't find any current references on Google but I didn't look very hard.

Watch the Intel projects, they may very well redistribute manufacturing capacity to the US.