[HN Gopher] Cisco says computer chip shortage to last six months
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Cisco says computer chip shortage to last six months
Author : mjmasn
Score : 206 points
Date : 2021-04-25 08:37 UTC (14 hours ago)
(HTM) web link (www.bbc.co.uk)
(TXT) w3m dump (www.bbc.co.uk)
| kevmo wrote:
| This seems overly optimistic.
| christkv wrote:
| I still don't really grasp what factor causes this general
| shortage across all chip producers and nodes. Why is a spike in
| demand for pc cpus and gpus causing a shortage in other chips
| that might be using older nodes? Are there some underlying other
| constraints under chip production that is causing a ripple effect
| up the supply chain?
| nnx wrote:
| I think it's a combination of 3 factors:
|
| 1) once in a century severe droughts in Taiwan force water
| rationing, chip production needs A LOT of water
|
| 2) stockpiling from China manufacturers (eg. Huawei) who want
| to mitigate real or potential US sanctions
|
| 3) generally higher demand in some sectors due to covid
| situation (incl. WFH and stimulus)
|
| (1) is probably the major factor, with others exacerbating it,
| see https://www.bbc.com/news/world-asia-56798308
| [deleted]
| matheweis wrote:
| I find it ironic that TSMC is building their shiny new 1100
| acre fab in _Arizona_ of all places [1], even as one of their
| main water sources is drying up [2]. You'd think someone in
| charge is thinking about these things.
|
| [1] https://www.bizjournals.com/phoenix/news/2021/03/02/taiwa
| n-s...
|
| [2] https://www.azcentral.com/story/news/local/arizona-
| environme...
| bsder wrote:
| Arizona has fab construction expertise, engineers and cheap
| workers.
|
| You have to put your new fab someplace useful or you have
| to import _everybody_.
|
| So, that cuts the number of places to a handful in the US.
|
| Texas, because TI, AMD, NXP nee Freescale nee Motorola.
| Idaho, because Micron. Oregon, because Intel. Arizona,
| because Intel and NXP. New York, because IBM. California,
| because everybody.
|
| If you're not doing massive R&D at the fab, you want cheap
| workers more than you want location to universities. That
| knocks out California and New York.
|
| As we just found out, Texas has weather so maybe not a
| great place for a 24/7 fab.
|
| Can you imagine TSMC personnel dealing with _winter_? So,
| probably not Idaho.
|
| So, Oregon or Arizona. I suspect Oregon is more expensive
| than Arizona in the places you want to put a fab.
| tgsovlerkhgsel wrote:
| > chip production needs A LOT of water
|
| Why is that? I would expect chip production to be a
| relatively small scale process compared to almost any other
| industries, simply due to the small amount of material
| involved.
|
| For example, how many CPU dies can you fit in a shampoo
| bottle or a pack of printer paper?
| burnished wrote:
| I can't say for certain, I am guessing they may use it to
| clean in between layers (additive and subtractive)? This
| article[1] supports the high water use but does not explain
| in greater detail to what ends it is specifically used.
|
| [1] https://www.sustainalytics.com/esg-research/investors-
| esg-bl....
| totetsu wrote:
| rainfall? there is a drought in Taiwan affecting ability of
| Fabs to operate I heard.
| https://techxplore.com/news/2021-04-taiwan-worst-drought-dec...
| Kliment wrote:
| Yes. The CPU and GPU demand has nothing to do with it. The
| reason is the car industry.
|
| For some reason in early 2020 all the car industry execs were
| convinced that people would buy dramatically fewer cars in
| 2020, due to pandemic crashing demand. Because they have a
| religious aversion to holding any stock they decided to shift
| the risk over to their suppliers, fucking said suppliers over,
| as the car industry normally does when they expect demand
| shifts. The thing that made this particular time special as
| opposed to business as usual is that the car execs all got it
| wrong, because people bought way more cars due to pandemic
| rather than less, due to moving out of cities and avoiding
| public transit. So they fucked over their suppliers a second
| time by demanding all those orders back.
|
| Now, suppose you're a supplier of some sort of motor driver or
| power conversion chip (PMIC) in early 2020. You run 200 wafers
| per month through a fab running some early 2000s process. Half
| your yearly revenue is a customized part for a particular auto
| vendor. That vendor calls you up and tells you that they will
| not be paying you for any parts this year, and you can figure
| out what to do with them. You can't afford to run your
| production at half the revenue, so you're screwed. You call up
| your fab and ask if you can get out of that contract and pay a
| penalty for doing so, and you reduce your fab order to 100
| wafers per month, so you can at least serve your other
| customers. The fab is annoyed but they put out an announcement
| that a slot is free, and another vendor making a PMIC for
| computer motherboards buys it, because they can use the extra
| capacity and expect increased demand for computers. So far so
| normal. One vendor screwed, but they'll manage, one fab
| slightly annoyed that they had to reduce throughput a tiny bit
| while they find a new buyer.
|
| Then a few months later the car manufacturer calls you again
| and asks for their orders back, and more on top. You tell them
| to fuck off, because you can no longer manufacture it this
| year. They tell you they will pay literally anything because
| their production lines can't run without it because (for
| religious reasons) they have zero inventory buffers. So what do
| you do? You call up your fab and they say they can't help you,
| that slot is already gone. So you ask them to change which mask
| they use for the wafers you already have reserved, and instead
| of making your usual non-automotive products, you only make the
| customized chip for the automotive market. And then, because
| they screwed you over so badly, and you already lost lots of
| money and had to lay off staff due to the carmaker, you charge
| them 6x to 8x the price. All your other customers are now
| screwed, but you still come out barely ahead. Now, of course
| the customer not only asked for their old orders back, but
| more. So you call up all the other customers of the fab you use
| and ask them if they're willing to trade their fab slots for
| money. Some do, causing a shortage of whatever they make as
| well. Repeat this same story for literally every chipmaker that
| makes anything used by a car. This was the situation in January
| 2021. Then, several major fabs were destroyed (several in
| Texas, when the big freeze killed the air pumps keeping the
| cleanrooms sterile, and the water pipes in the walls of the
| buildings burst and contaminated other facilities, and one in
| Japan due to a fire) making the already bad problem worse. So
| there are several mechanisms that make part availability poor
| here:
|
| 1. The part you want is used in cars. Car manufacturers have
| locked in the following year or so of production, and "any
| amount extra you can make in that time" for a multiple of the
| normal price. Either you can't get the parts at all or you'll
| be paying a massive premium.
|
| 2. The part you want is not used in cars, but is made by
| someone who makes other parts on the same process that are used
| in cars. Your part has been deprioritized and will not be
| manufactured for months. Meanwhile stock runs out and those who
| hold any stock massively raise prices.
|
| 3. The part you want is not used in cars, and the manufacturer
| doesn't supply the car industry, but uses a process used by
| someone who does. Car IC suppliers have bought out their fab
| slots, so the part will not be manufactured for months.
|
| 4. The part you want is not used in cars, and doesn't share a
| process with parts that are. However, it's on the BOM of a
| popular product that uses such parts, and the manufacturer has
| seen what the market looks like and is stocking up for months
| ahead. Distributor inventory is therefore zero and new stock
| gets snapped up as soon as it shows up because a single missing
| part means you can't produce your product.
|
| So here we are. Shameless plug - email me if you are screwed by
| this and need help getting your product re-engineered to the
| new reality. There's a handful of manufacturers, usually
| obscure companies in mainland China that only really sell to
| the internal market, that are much less affected. Some have
| drop-in replacement parts for things that are out of stock,
| others have functionally similar parts that can be used with
| minor design adaptation. I've been doing that kind of redesign
| work for customers this whole year. Don't email me if you work
| in/for the car industry. You guys poisoned the well for all of
| us so deal with it yourselves.
| WanderPanda wrote:
| Awesome breakdown! Edit: Sad to see so much value destroyed
| DrAwdeOccarim wrote:
| I agree it's sad to see things disrupted/destroyed, but it
| certainly lit a fire under a ton of people who have the
| power to make dramatic shifts. I think this will mark the
| beginning of a new era in semiconductor abundance and
| innovation.
| Kliment wrote:
| My dramatic shift - never work on a project that helps
| the car industry. They're now on the same shitlist as
| weapons, coal, and surveillance capitalism.
| WanderPanda wrote:
| Just a handful more shifts and you end up with just
| ,,never work" :p
| syntheticnature wrote:
| The key is to time this to align with retirement.
| rhn_mk1 wrote:
| It would be a really sad world if there was no way to
| survive except by doing harm. Something tells me it's an
| overly pessimistic outlook.
| lazide wrote:
| It seems overly naive to assume any company's actions
| don't have pros and cons, or aren't part of the larger
| society/ecosystem you're enabling by existing? You can't
| take an action (or exist and take no action) without a
| side effect, and at the scale of any significant company,
| it is impossible to do what someone somewhere considers
| to be harm to someone or something.
|
| Picking and choosing the scope, scale, and amount of the
| type of harm you're comfortable with certainly seems
| worthwhile, but pretending there is any option that is
| harm free seems like self deception. Even refusing to
| play (not living?) has side effects most would consider
| harmful - at least to those around you.
| rhn_mk1 wrote:
| That is a good point. Perhaps a different statement makes
| more sense: it's hard to believe that there are no
| options where the benefits outweigh the harm.
| lazide wrote:
| In my experience, the benefits do outweigh the harm in
| pretty much all cases where it lives awhile - if you pick
| the right group of people to care about, and the right
| things or people to be ok harming.
|
| We all do it, directly or indirectly. It's necessary to
| survive. It's common for instance to not worry too much
| about the earthworms dying on the sidewalk after the
| sprinklers run. Most people would consider someone pretty
| weird if they didn't drive because of the body count of
| insects on their windshield.
|
| For example - everyone who drives is implicitly or
| explicitly saying the benefit to them outweighs the harm
| to those insects. Everything has a trade off.
|
| Most life survives by eating other life (yes even
| Vegans), and even pure photosynthetic algae has to kill
| or crowd out (and starve) competitors and things that
| would kill and eat it, or they would no longer be alive.
|
| It's easy to be isolated from this reality, especially
| with modern life meaning we don't need to gather, raise
| and/or kill our own food.
|
| Nature is not (just) a national park with carefully
| curated trails and animals to snap pictures of when they
| grace us with their presence. It's wild fight for
| survival and dominance - full of growth, birth, gore,
| beauty, and death.
|
| Recognizing that someone's trade off to make another
| country less strong (a 'other') in exchange for making
| themselves richer or their country more capable of doing
| the same in the future is important (one example) - say a
| defense contractor making a new weapon.
|
| It is a specific mindset and trade off that we might not
| agree with it even find repugnant, but it is keyed off
| important survival needs and a fundamental part of the
| world and nature we are foolish to ignore.
|
| What do you consider ok to harm, to get the benefits for
| the people or things you care about? At some point it
| might be worth making it concrete, it can be
| illuminating.
| rhn_mk1 wrote:
| My point was not about nature though, rather it was about
| being sustainable. Looking at the classic prisoner's
| dilemma, there are activities which bring localized
| benefit, but an overall loss in a non-zero-sum game.
|
| Presuming that human activity is not zero-sum regarding
| whatever system of values we take, it's clear cut that
| some activities are bad, period.
|
| This makes the grandparent's examples clearer: coal
| production benefits some people now but hurts future
| generations disproportionately. Wars hurt all sides, and
| allow some of them partially recover, and never as far as
| if they joined forces. Car companies throw the whole
| semiconductor industry under the bus in exchange for not
| having to keep inventory.
|
| In a huge simplification, it's self-destruction I'm
| talking about, not sacrificing little things to gain
| greater ones, like exchanging the lives of insects to
| feed a human cvilization (presuming you value humans
| more).
|
| Of course, it's possible to construct an arbitrary system
| of values to justify your own arbitrary deeds as
| "survival" or "natural", but I don't find such systems
| convincing.
| beowulfey wrote:
| I hate cars for so many reason already, and here you are
| telling me that they are literally squeezing global
| production of chips too. Cherry on top.
|
| I really want us to stop being so obsessed with cars, because
| no matter how useful they are to transportation, in my mind
| they just can't be worth the pain and damage they cause to
| our society...
| kqr wrote:
| I also hate cars for so many reasons but surely "their
| manufacturers run an efficient operation and can outbid
| competitors for a scarce resource" isn't one of them?
| nightcracker wrote:
| Only if you hold the religious belief that capitalism and
| its consequences are inherently beyond critique.
| Kliment wrote:
| That's not the case here - the case is that they are big
| and powerful enough to bully suppliers so that suppliers
| assume a lot of the risks that any normal-sized company
| with fewer political connections would have to assume
| itself.
| kqr wrote:
| From your original comment I gathered that they "will pay
| literally anything" for you to swap the mask in your
| remaining 100 slots. That sounds to me like regular free
| market-enabled bullying.
|
| Are you saying it's a different kind of bullying? What
| makes it different? You original comment really piqued my
| desire to understand this.
| Kliment wrote:
| Customized car parts are often a major part of a
| subvendor's revenue, but they are stuck in a monopsony
| situation - nobody but audi will buy an audi rear seat
| height adjustment lever. The market power of large
| automakers mean that they can very quickly become the
| primary revenue source of a small vendor, and there's no
| collective action that various vendors can take against
| the automaker. The automaker can then get away with
| conditions like having the vendor pay massive penalties
| for not delivering a number of parts within a 15 minute
| time window, changing delivery volumes on short notice,
| or payment terms where they pay for parts months and
| sometimes years after they are delivered, and the vendor
| has to sit on their costs in the meantime. The vendor
| can't afford to lose the automaker as a customer, but
| they also can't afford to have enough margin to swallow a
| back-and-forth variation in demand without adjusting
| production volumes. In this case, the automakers ended up
| in a tight spot because they had fucked over all their
| vendors in this way simultaneously, and so ended up in a
| situation where their production lines were literally
| standing still because the vendors could not deliver as
| they had just finished adjusting to the previous change.
| This is when the automakers shifted to offering way-
| above-market money for product, because the alternative
| was massive losses from stuck production lines.
| kqr wrote:
| Oh. You're saying they normally wouldn't pay the cost of
| the mask change, only say to their vendors "do it and
| absorb the cost or we'll pull our business?"
| hnews_account_1 wrote:
| Source for all this? I couldn't find a link on the text wall
| so I apologize if I missed it.
| Kliment wrote:
| I work in this industry, I talk to vendors, I see this
| stuff daily. If you want the manufacturing-side background,
| nikkei's semiconductor news has lots of material on this (
| https://asia.nikkei.com/Business/Tech/Semiconductors/ )
| including the fabrication disasters that ruined NXP and
| Renesas. Go through the last few months to see it
| unfolding. For the other stuff, I can't give you public
| evidence, but I've been working with customers adapting
| their designs, and they've had confirmed orders from
| manufacturers delayed or cancelled, some citing
| prioritization of the car industry, others not giving any
| reason, but then auctioning their remaining stock out, with
| the final bids going to automakers at 8x the 2019 price.
| Microchip, a major vendor, introduced a program where they
| will provide prioritized product a year from now in
| exchange for non-cancelable non-refundable month-by-month
| demand visibility into the future ( https://www.microchip.c
| om/content/dam/mchp/documents/announc... ). I don't know
| what sort of link you need, this is literally what I do
| every day.
| vidanay wrote:
| Sounds like prima facie to me.
| hnews_account_1 wrote:
| Prima facie based on what? Anecdotal experience?
| vidanay wrote:
| Direct industry experience according to the last
| paragraph.
| throwaway4good wrote:
| I think what you write maybe is what has broadly been going
| on (across all industries - not just cars). Sudden drop in
| demand followed by a sudden surge in demand. Plus disruption
| is suppliers ability to deliver (due to lockdowns and border
| closures).
|
| It is somewhat the same story as being described here - which
| is an article about a company that makes display drivers:
|
| https://www.scmp.com/tech/tech-trends/article/3128421/how-
| sh...
| christkv wrote:
| Thanks a very interesting and insightful analysis.
| christophilus wrote:
| My dad was in manufacturing. He always told the car companies
| to fuck off because of this. If you start doing business with
| a car company, the bullying starts right away. You eventually
| are forced to choose between them and your other customers.
| It's probably best to just never start down that road if you
| can avoid it.
| vidanay wrote:
| My company refuses to work with automotive primarily
| because of the billing. They require you to front the money
| for all R&D, and tooling, and then they literally pay
| whenever they want for actual delivery (they completely
| ignore invoice terms such as Net 30 days - and will pay at
| 60, 90, or 111.8843 days)
| toyg wrote:
| They're not the only ones to do that, but yeah, they have
| a rep. I've heard of FIAT (now Stellantis) routinely
| paying suppliers 3 to 6 months after a contract is
| fulfilled. Absolutely ludicrous.
| vidanay wrote:
| It's actually worse for us since we are capitol equipment
| suppliers. It could literally be 3-4 years before we get
| paid since they won't pay until the equipment has a
| proven production rate/quality/other random metric. They
| will find just about any excuse to not sign off the
| IQ/OQ/PQ and if there are any delays in other equipment,
| or materials, or whatever then they don't pay.
| touisteur wrote:
| This sounds a lot like how big distribution chains work
| around here... Maybe it's a thing with economies-of-
| scale-based businesses. Like 'we'll be moving MILLIONS of
| your gadget but you'll have to sell your and your
| employees' and providers' souls. And self-respect.
| lazide wrote:
| See above re: bullying.
|
| If they know they can get away with their suppliers
| having to front all the cash, why not do it? If all their
| competitiors get away with it, they'd be fools not to as
| that is a lot of expense and interest they're eating and
| they'll need to make up for that somewhere.
| touisteur wrote:
| Yes. And still not everyone wants to work for them. I'd
| sure never ever ever try to sell them anything... I'm
| thinking with such reputations they get shafted out of
| good opportunities and this has a cost. I'm not sure how
| Costco treats their partners & providers but I'd guess
| they're still shrewd without bullying and sell better
| quality. I know the business model is different but
| clearly there's room and money to win in other ways.
| vidanay wrote:
| Walmart is essentially the same, but I have no firsthand
| experience there since we are not in the retail side of
| things.
| kqr wrote:
| Very interesting breakdown. It sounds to me like the core of
| the problem is that everyone needs fab slots to build their
| things, but fab slots are a limited resource and car
| manufacturers have bid up their price to levels few others
| are willing to match. Does that seem about right?
| MangoCoffee wrote:
| here's the wafer agreement that i found between TSMC and
| Altera. there's probably more to this. i think auto maker's
| chip suppliers didn't sign the wafer agreement with fabs.
|
| " 5.12 ADJUSTMENT IN CAPACITY RIGHTS AND OBLIGATIONS.
| Unless otherwise agreed in writing by the Parties, any
| adjustment in the Buyers' Percentage Interests which
| results in a change in their Adjusted Percentage Interests
| (as defined in Subsection 1.1.3), shall not become
| effective for purposes of the Buyers' Basic Purchase Shares
| until the thirteenth (13th) week after the date upon which
| the adjustment in Percentage Interests occurs pursuant to
| the LLC Agreement, and unless agreed otherwise by TSMC and
| each Buyer under a Purchase Order, no such adjustment in
| Percentage Interests, when so effective, shall operate to
| cancel, amend or otherwise affect any Purchase Orders
| accepted by TSMC prior to the date that such adjustment in
| Percentage Interests is so effective."
|
| https://corporate.findlaw.com/contracts/operations/purchase
| -...
| Kliment wrote:
| No, that's wrong. Fab slots are not a limited resource
| (except at the very high end). They just have a lead time
| of 12-18 months and it takes a lot of time and a lot of
| lost production to change what they produce any faster than
| that.
| kqr wrote:
| The way your original comment phrased it I assumed phab
| slots are not actually locked in 12 months in advance,
| and if you pay someone enough they might agree to swap
| the masks they were going to use for yours. That would
| mean fab slots are acting like a scarce resource in the
| short term (3--12 months?). Is that also not right?
|
| I'm not saying the system isn't broken and/or that car
| manufacturers aren't jerks for monopolizing a scarce
| resource and putting other demands in tight spots. I'm
| just reading it as regular free market capitalism level
| broken, but it sounds like you're saying it's even more
| broken than that. This is a topic very relevant to my
| current interests so I truly do wish to understand it.
| Kliment wrote:
| There is a cost to switching, and a time delay. If you
| switch faster than the optimal interval, you lose some of
| the stock that was in-process. Because of this, a large
| industry changing their mind back and forth rapidly with
| a particular alignment to that interval can cause
| disproportional disruption. This is happening here. They
| changed their mind on short notice, causing one wave of
| disruption as everyone adapted, then they changed their
| mind on short notice _again_ in the opposite direction,
| causing a second, even bigger wave of disruption on top
| of that. Suppose you were on a plane from London to
| Dubai, and someone tells you to get to New York as fast
| as possible. You can 't turn the plane around, so you
| wait until you're in Dubai and take the next plane in the
| opposite direction to New York. But halfway there you get
| a phone call saying you need to be in Singapore instead.
| Again, you have to wait until you land before you can do
| anything about it, and your entire current trip is
| wasted. Getting from where you were originally headed
| (Dubai) to your ultimate destination (Singapore) is a
| short trip, but by timing the instructions at especially
| inconvenient moments, you end up having to add enormous
| cost and resource waste to reach the same target. The car
| industry is definitely paying for their fuckup at the
| moment, but everyone else who uses electronics is stuck
| on that plane with them going the wrong way.
| kqr wrote:
| Ah, okay, that makes sense. Do I get it right that there
| are then essentially these two additional problems going
| on here, beyond short-term slots being a scarce resource:
|
| - When manufacturers change their minds quickly and pay
| the price to buy up a lot of slots last minute, they are
| effectively also "burning" some slots that will simply no
| longer add to worldwide production of anything? and
|
| - Being such a big customer with a high variance in
| demand, the car industry have are making it nearly
| impossible for the rest of the market to make rational
| decisions based on long-term forecasts?
|
| (It might sound like I'm stating the obvious here but I
| know how often I think I understand something but later
| turn out to have missed the mark completely anyway.)
| Kliment wrote:
| Yes. See my reply to your other comment.
| [deleted]
| JohnJamesRambo wrote:
| What a great comment. Does anyone know if Tesla went the old
| automaker way or do they stockpile chips and/or had better
| forecasting on demand during pandemic? It seems their
| production is doing great.
|
| Selfish reason, I want to know if my Tesla order will be
| delayed.
| MangoCoffee wrote:
| Tesla's own chip is fab with Samsung for 14nm and 5nm.
| Tesla still buy chip from supplier like NXP.
| postingawayonhn wrote:
| I think their factories were only shut for a couple of
| weeks and they never took the approach that they would be
| selling fewer vehicles.
| XorNot wrote:
| Doesn't Tesla have a _huge_ backlog? If they cleared it
| it would be a miracle.
| marvin wrote:
| I'm not 100% certain, their suppliers could concievably
| have been affected by the same problems everyone else has.
| But my impression from following Tesla's quarterly reports
| before and during the pandemic is distinctly that they just
| kept plowing on, business as usual. No changes in
| production or their investments for production capacity,
| apart from production delays due to government-mandated
| shutdowns.
|
| Hard to underestimate the impact of Musk's leadership when
| you see that result.
| GNU_James wrote:
| Just 2 more weeks!
| throwaway4good wrote:
| 2020 has seen record investment in semiconductor manufacturing
| equipment (+20% to 70 B USD).
|
| https://www.scmp.com/tech/tech-trends/article/3129611/us-chi...
|
| In particular in China and South Korea.
|
| I wonder when all this extra capacity translates into more
| supply?
| emodendroket wrote:
| Both those countries are trying to compensate for
| sanctions/export controls though, right?
| throwaway4good wrote:
| China certainly is.
|
| South Korea, I don't know. The spike in equipment purchase
| certainly sticks out, maybe they (SK) expect to be
| able/allowed to supply the Chinese companies, that Taiwan
| can't/won't?
| emodendroket wrote:
| Japan has put pretty serious sanctions on them though, on a
| (frankly rather dubious) theory that the North Koreans are
| getting materials from them.
| scotty79 wrote:
| 2 years should be enough from what I've read.
| Bombthecat wrote:
| Yeah, most of the time i read it is something between 2 or 3
| years before a new fab opens.
| throwaway4good wrote:
| To me it looks that following this chip shortage there will
| come a massive supply glut as all this manufacturing
| capacity comes online.
|
| Maybe China and South Korea will be alright, as they can
| focus on the Chinese market in a world bifurcated by the
| US-China Tech war, but for the rest of the world, it seems
| that a supply glut is sure to follow?
| 11thEarlOfMar wrote:
| Yes. This pattern has been repeating since the advent of
| mass-producing semiconductors. Most recently, 2016-2017,
| a new NAND technology emerged. Referred to as 3D NAND, it
| greatly increased bit-density and reduced cost of NAND
| flash. Samsung, Toshiba and to some extent Micron all
| decided they were going to lead that massive market.
| Moreover, the 3D NAND required many more layers and
| therefore more 'equipment per chip'. These three bought
| new equipment it required in record amounts. You'll see
| companies like Lam Research with revenue spikes in 2017.
|
| 2019, though, not so much. All the capacity came online
| at the same time, there was oversupply, the price of 3D
| NAND plummeted, and the chip companies pulled back buying
| dramatically, sending the equipment suppliers from feast
| to famine, again.
|
| I recall a 2-year period in the late '90s where the San
| Jose Mercury News headline in August read '1,000 Jobs
| Open at Lam and Applied' to one year later, 'Lam to Lay
| Off 1,500'.
| iancmceachern wrote:
| I've worked in, and on the periphery of the semi world
| for much of my career and can second this. Not oy for
| direct employees but also the huge world of contractors
| and sub contractors that supply engineering services and
| equipment to the semi industry. It's very much a boom and
| bust industry, with huge swings from everyone is busy as
| could be to everyone is looking for work. It's difficult
| because many of the skillets and manufacturing processes
| for these systems are mostly specialized to this
| industry.
|
| Edited- typo.
| rhodozelia wrote:
| I wonder what parallels can be drawn to the mining
| industry which is also very boom and bust due to cyclical
| nature of commodities prices and the lead time in
| bringing new supply to market
| iancmceachern wrote:
| And the effort needed to get something going. Just like
| in semi mining can be years of investment before anyone
| sees a dollar in returns.
| wbc wrote:
| Thoughts on reducing the cyclical nature of this
| industry?
| iancmceachern wrote:
| The challenge is that to design a new line, or production
| cell, or process they need a broad range of expertise
| that is very specialized. For example, they may need
| folks that are phds/experts in plasma
| deposition/sputtering/etc. to do a bunch of multiphysics
| computer simulations to get the operation in the chamber
| right. Then they need folks with expertise in building
| the chambers, and associated cryo pumps, then they need
| robotics experts to architect, design and implement all
| the automation, chemical engineers for all the crazy
| chemistry going on, etc. It would be very expensive to
| keep all those folks on staff, and even harder to keep
| them all busy.
|
| I view it like the construction industry. I worked as a
| concrete/asphalt inspector for my local municipality in
| college and the cycles of the road repair industry are
| similar in my mind. In this world there are lots of
| "crews" that travel around the country following the
| work. They start in the south in the winter, and
| gradually work their way up to the north as the ground
| thaws and road construction can be done. They usually
| have a 2 week - 2 month contract in each town and then
| move on. No one area has enough work to keep them busy
| for a season. The industry is built on that ability to
| maximize work/profit and minimize downtime by moving from
| customer to customer as the work does also.
|
| I view it as similar for many of us who do/have worked in
| semi. When there is a glut of work, it's all good. When
| there isn't there are hundreds or thousands of highly
| skilled, highly specialized folks needing work. Those
| folks/consultancies typically are able to pivot to other
| industries that need the same skillets readily and easily
| (like medtech, aerospace, automotive, etc.) and keep
| working during the slow period for semi. The alternative
| would be for semi equipment designers/manufacturers (like
| ASML, etc) to rely more on in house permanent workforces
| and less on contractors and subcontractors but I fear a
| fundamental change like that may not be sustainable from
| a cost standpoint. These companies already have huge
| swings in their workforce numbers every few years, often
| hiring or letting go hundreds or thousands at a time.
|
| Edited - typo
| whazor wrote:
| It depends, if you are upgrading machines to produce smaller
| (5nm instead of 7nm) then you lose some productivity as you get
| lower yields. But many of the companies are adding totally new
| semiconductor equipment and not removing the older once. That
| being said, the massive chip shortage is across the entire
| spectrum, including the bigger older chips.
| Kliment wrote:
| Nobody is scrapping old equipment when they move to a new
| node. The equipment just gets sold to whoever is one rung
| down on the pecking order, to keep producing parts at a lower
| profit margin. Early 2000s processes are still in extensive
| use.
| MangoCoffee wrote:
| "There are numerous other applications for semiconductors, but
| these represent the general trend. One cannot blame semiconductor
| companies for switching capacity to growing applications while
| automakers cut production (and presumably semiconductor orders)
| by 40% over two quarters. It will take time to resolve the
| shortages. TSMC stated it takes at least six months from
| semiconductor production to auto production and involves several
| links in the supply chain. Capacity can be shifted in the short
| term, but increasing overall capacity often requires construction
| of new wafer fabs, which takes about two years. Automakers gave
| up their place in line, so they will have to wait their turn for
| semiconductors."
|
| https://semiwiki.com/semiconductor-services/298336-automaker...
| downrightmike wrote:
| Pretty much the only auto supplier that wasn't forced to move
| to just outside the automaker's own factories and on the tight
| chain of just in time. It was just acceptable to not highly
| integrate them, and oops. Maybe the automakers will make their
| own fabs. Which is what is really needed. But then again, we've
| been in a gut because of over production for years. So really,
| this is just automakers shifting the blame for the lack of
| demand of the last decade to someone that their stockholders
| are ok with blaming, because why admit your mistakes and fix
| them, when you can blame someone else?
| bsder wrote:
| > Maybe the automakers will make their own fabs.
|
| Or, perhaps, they could ... like ... hold _inventory_.
|
| Gasp! But that's just crazy talk.
|
| Er, wait, that's exactly what Toyota did when they discovered
| that a semiconductor supply shock could kill their business.
| dehrmann wrote:
| > Maybe the automakers will make their own fabs. Which is
| what is really needed.
|
| Seems like a massive investment in something that isn't their
| core competency (at all) for a 6-month disruption that hits
| ~once a generation+. It'd be a lot cheaper to just pay a
| foundry for reserved capacity, to stockpile a year supply of
| chips, or engineer cars to have more options for chips.
| AJ007 wrote:
| If Intel couldn't keep up with the latest fabs I can't
| believe an automaker could start from 0 and have any remote
| chance of success. Volume would be too low to make it work
| financially even if they could.
| __turbobrew__ wrote:
| You dont need 5nm transistors to run your vehicle. 10
| year old processes would probably be enough for
| automotive needs.
| thetinguy wrote:
| Old processes don't disappear when the cutting edge
| manufacturers switch to smaller features. A lot of jelly
| bean parts, like the kind that go into a car, are made
| with larger features that are easier to work with. I
| think manufacturing is a core competency for automakers.
| While there are significant differences between car
| making and chip making, I don't think you should discount
| an automaker's ability to manufacture things.
| dehrmann wrote:
| > I don't think you should discount an automaker's
| ability to manufacture things.
|
| Have you see infotainment UIs?
| inetknght wrote:
| > _or engineer cars to have more options for chips_
|
| You mean like having open standards that consumers can
| plug-and-play their own devices into?
|
| That's absurd. /s
|
| How would auto makers vendor-lock consumers after that?
| scoopertrooper wrote:
| Should they make their own tires as well? Mine their own ore?
| All parts of the supply chain are subject to external shocks.
| Increased vertical integration isn't necessarily the answer
| in all cases.
| aurizon wrote:
| One of the large problems is a shortage of some common part that
| is widely used. I recall when 74LS245 were selling for over $100
| each to people with $500,000 machines that needed that part.
| During that shortage we actually built small boards with 3-4
| lesser chips that fulfilled the need for the part. When a genuine
| 245 was obtained, it could be easily swapped in, but many
| machines lived out their full life with this kluge in it. That
| one series of chips built Future into the colossuss it is today
| because they had the smarts to get their engineers to spec in
| that family (and many others) and Future booked huge orders with
| Japanese suppliers and enjoyed huge margins. ClassIC did the same
| thing later. Now Asia dominates.
| thedeepdive wrote:
| Having worked in the auto industry I can say this is the sort of
| thing was never, ever expected from a supply shortage. The
| frailty of the global supply chain network has been brutally
| exposed these last 14 months.
| hctaw wrote:
| I thought it was a poorly forecasted demand shortage that led
| to a supply shortage, since auto manufacturers reneged on their
| purchasing a year ago.
| hourislate wrote:
| When you expect your materials to arrive daily for that days
| production and keep almost zero inventory and relying on "Just
| in Time Delivery", then cancel all your orders overnight and
| then expect them to start again on whim, on the day you decide
| without any heads up to your suppliers...what could possibly go
| wrong? Can you imagine if Apple behaved this way? If iPhone
| sales drop one quarter, cancelling all their chip production
| until sales picked up again?
|
| Auto manufactures are spoiled, they get anything they want
| whenever they want from the Government every time they start
| crying. Whether it's multi billion dollar tax breaks (Ford,
| Oakville, GM Oshawa, etc), multi billion dollar Gov programs
| (cash for clunkers) at the tax payers expense or being allowed
| to screw their suppliers for billions through bankruptcy (GM).
|
| Don't excuse their poor management, forecasting, greed for
| frailty of the global supply chain. It's not like a asteroid
| hit Taiwan.
| bsder wrote:
| > Can you imagine if Apple behaved this way? If iPhone sales
| drop one quarter, cancelling all their chip production until
| sales picked up again?
|
| Actually, Apple _HAS_ done this. And it can kill a company.
|
| For example: Peregrine Semiconductor who got bought by Murata
| in the aftermath.
| my123 wrote:
| For Peregrine, it's different. They had even replaced with
| another supplier.
|
| (From
| https://www.benzinga.com/tech/14/08/4808511/peregrine-ceo-
| ji...)
| tonyedgecombe wrote:
| > The frailty of the global supply chain network has been
| brutally exposed these last 14 months.
|
| I think it's the exact opposite, supply chains have held up
| remarkably well. If I had believed some people here we would
| have been eating each other by now but apart from a shortfall
| in toilet paper things have been fine.
| an_opabinia wrote:
| Probably there is no semiconductor shortage. You can still
| order promptly many advanced electronics that use similar
| parts quickly, GPUs notwithstanding.
|
| Something happened to the people in China who take 10-100
| electronic parts manufactured there and turn them into 1, to
| deliver to assembly in the auto's destination for the
| purposes of tariffs (by reducing the count of imported parts
| from 100 to 1). Because of the weird mechanics of
| manufacturing origin, which definitely affects how cars and
| networking equipment have to be made, this is my hypothesis
| for why we're only hearing about these issues from a very
| narrow set of industries and not others.
|
| In terms of what could have happened my bet is it's going to
| be pretty horrible.
| baybal2 wrote:
| > Because of the weird mechanics of manufacturing origin
|
| Yes
|
| Without special RVC exception for car companies, some US
| made cars would have to be stamped as Made in
| China/Germany/Mexico as per rules of origin.
| 2OEH8eoCRo0 wrote:
| I think that I agree. I think the frailty of people, not
| supply chains, have been exposed. Oh man, you might have to
| keep your three year old car or two year old phone an extra
| year. Oh the humanity!
| detaro wrote:
| Fairly sure the companies reliant on selling cars care more
| about this than the people buying cars.
| [deleted]
| f6v wrote:
| There were some shortages in Belgium that I didn't expect.
| Like frozen broccoli missing everywhere for a week or two.
| Flour went missing for a month, probably due to panic buying.
| But otherwise, I enjoy fresh fruits, vegetables, and nuts
| which are definitely imported from somewhere.
| dhosek wrote:
| There are odd disappearances from the grocery shelves from
| time to time. For example, one thing I've noticed is that
| outside of the trinity of Cola/Diet-Cola/Lemon-Lime soda,
| the availability of other sodas has been hit or miss for
| the last year. There have been others, less memorable
| because they're more transient, but it's more often the
| case that I'm likely to not be able to find product X at
| the grocery store in the last year than previously.
| enriquto wrote:
| what kind of savage eats frozen broccoli?
|
| EDIT: not trolling, i'm really curious. Fresh broccoli is
| available all year round everywhere and it is so much
| better than the frozen stuff. Why would anyone buy it
| frozen?
| istorical wrote:
| can you share what makes you think fresh broccoli is
| better than frozen broccoli?
|
| I can see why fresh would be better if you were planning
| on eating the broccoli raw or perhaps steamed, but since
| I mostly use broccoli in soup or stir fries, it ends up
| fairly thoroughly cooked. In which case I don't believe I
| would notice a difference.
|
| I purchase frozen vegetables (stuff like brocc,
| cauliflower, peas, carrots) because they come pre-
| chopped, last near indefinitely so I don't have to worry
| about finishing them before they rot, and whatever amount
| I want at that moment can just be poured out of the bag,
| pre-chopped, into whatever (usually single pot) meal I am
| making.
| enriquto wrote:
| i only eat steamed broccoli (15min for the stalks and
| 4min for the greens), and the frozen variety never has
| the familiar "crunch". Maybe I tried only bad quality
| frozen stock.
| burnished wrote:
| Freezing breaks down cell walls (ice crystals form and
| puncture cell walls, faster freezer leads to smaller ice
| crystals leads to less breakdown). I'm not an expert but
| I suspect you may never get the crunch from frozen
| broccoli.
| lazide wrote:
| You can store it in a deep freezer without losing much
| nutritional value, which means it's available on a whim
| without having to make a trip to the store. In many
| places that means you have it if you have a hankering
| without spending 1+ hr tracking it down first (typical if
| you're not in an urban center or next door to a grocery
| store). I usually have some fresh broccoli stocked, but
| sometimes I already ate it. If you have kids, or are more
| remote (so it's 2 hrs round trip or more), that is huge
| because you just can't make that trip many times - too
| many other demands on your attention.
| baix777 wrote:
| Toyota expected it, showing once again why they are one of the
| best run car companies.
|
| https://www.reuters.com/article/us-japan-fukushima-anniversa...
| jcadam wrote:
| Glad I already got my 2021 F-150. There are lots in MI full of
| completed trucks awaiting chips. And looks like they're already
| planning temporary layoffs[1]:
|
| 1. https://www.yahoo.com/news/ford-extends-shutdown-
| stellantis-...
| InitEnabler wrote:
| The winter storm in Texas did a big damper on NXP, Samsung, etc.
| Some fabs are not at 100% so I highly doubt it's going to take 6
| months to recover.
| HowardStark wrote:
| Interesting. Other estimates had put it in the "upwards of a
| year" territory [1,2] so to me this 6-month estimate seems
| optimistic.
|
| Samsung only recently (end of March) got their fab up and
| running close to production levels. NXP was a bit faster on the
| draw, but even still there are likely to still be more issues
| than normal.
|
| At the end of the day, not much to do except hope for the best
| and expect the worst.
|
| [1] https://arstechnica.com/tech-policy/2021/04/global-chip-
| shor... [2]
| https://www.washingtonpost.com/technology/2021/04/13/intel-c...
| dehrmann wrote:
| Dumb question: automakers do relatively simple things with their
| chips. Is there room on wafers with more advanced chips to
| squeeze in automotive chips?
| alted wrote:
| Nope. Since most manufacturing steps are performed on an entire
| silicon wafer at once, the cost per chip is cheaper if there
| are more chips on each wafer. As a result, wafers (for both
| basic and advanced chips) are filled with rectangular chips
| packed as tightly as possible (and when designing chips, prices
| are often talked about in units of "price per area of
| silicon"). Images from a web search for "semiconductor wafer
| dicing" illustrate this [1].
|
| [1]
| https://duckduckgo.com/?t=ffab&q=semiconductor+wafer+dicing&...
| tims33 wrote:
| "The problems have been worsened by a string of other factors,
| including a fire at a semiconductor factory and weather issues."
|
| It is sometimes humbling to remember that despite our technical
| advances we're still subject to the forces of nature.
| segmondy wrote:
| Fire at a factory is not a force of nature, and it might be
| that the weather issue is also not a force of nature like we
| saw in TX. Sometimes saving money instead of investing in risk
| mitigation systems cause things to fail. I don't believe force
| of nature is behind the chip shortage unless we are counting on
| "to err is human" then sure.
| afrodc_ wrote:
| I'm fairly certain the weather issue is a very gnarly drought
| in Taiwan which would fit the bill
|
| https://www.google.com/amp/s/www.bbc.com/news/world-
| asia-567...
| afrodc_ wrote:
| I'm fairly certain it's a gnarly drought in Taiwan that the
| article is talking about which would fit the bill
|
| https://www.google.com/amp/s/www.bbc.com/news/world-
| asia-567...
| hristov wrote:
| Well lets be honest, while we are subject to the forces of
| nature, this particular time we mostly became a victim of the
| forces of the Texas devil may care mentality.
| xyzzy21 wrote:
| The biggest problem is everything is JIT so all supply chains
| using JIT (like all of them) get disrupted with as little as 10%
| variance from the media flow rates. The only real answer is to
| relax the reasons why we have JIT: taxes on inventory which
| prevent accumulating safety stock inventory. Having larger safety
| stock would very quickly end this supply chain disruption and
| solve the chip shortage in few months rather than 6-24 months.
| LatteLazy wrote:
| Since when are companies taxed on inventory? I thought JIT was
| about freeing up capital and avoiding waste (spoilage, out of
| date inventory etc)? It's hard to change that...
| eloff wrote:
| There are taxes on inventory? How does that work?
|
| I thought it was just expensive to tie up a lot of capital on
| inventory.
| patmorgan23 wrote:
| Both are issues. In most states the property tax applies to
| all physical assets of the business. So they have to pay
| taxes on all their furniture, manufacturing equipment,
| computers, and yes any inventory they have sitting around.
| warlog wrote:
| Me too(?)
| jeltz wrote:
| Inventory tax? Is that a common thing? I have never heard of it
| before and my country definitely does not have it but we still
| have plenty of JIT.
| lazide wrote:
| Even if we fixed it today, it's unlikely to end this supply
| chain disruption - it will likely make it worse, as now that
| companies can't avoid facing this problem they have to get more
| stock in order to build a buffer. Making it easier/cheaper for
| them to build a BIGGER buffer just means more hoarding/supply
| chain shocks until everyone has enough of a buffer they stop
| trying to hoard/buy extra.
|
| The issue is that when you become brittle supply chain wise,
| the only real answer is to stock more/buy more individually -
| which crushes the supply chain even more. Either that, or co-
| ordinated (gov't level often) rationing, which has it's own
| problems.
| sct202 wrote:
| So kind of... operationally with JIT you're encouraging
| yourself and suppliers into figuring out how to lower batch
| sizes and lead times so that the supply chain can be more
| nibble and financially the biggest benefits to JIT are working
| capital reductions because you don't have to buy in giant
| increments.
| hnews_account_1 wrote:
| Authoritatively stating that inventory taxes are the reason for
| JIT won't make it the truth. Read a bit more for why Toyota
| actually came up with the concept. Inventory management is
| about efficiency. Even if entirely and completely untaxed, you
| want JIT to make sure your production is not over capacity and
| you aren't wasting money.
|
| Usual hackernews bullshit.
| R0b0t1 wrote:
| Inventory taxes inform the decisions of every business I have
| done work for. Without the taxes we would carry a few months
| of parts. But we can't. It's too expensive.
| nitrogen wrote:
| One of the things that turned me off of using Amazon for
| fulfillment when I was trying to run a barely ramen
| profitable hardware startup was that I might get stuck
| filing property taxes in a whole bunch of states. That and
| I was so broke that I could only afford to ship one box of
| inventory to one destination, and they insisted on
| splitting into multiple different warehouses.
| hnews_account_1 wrote:
| This was not a black and white statement. You need to read
| better. I said JIT was not created for the sake of
| inventory taxes. JIT doesn't exist just for the sake of
| inventory taxes either. Why would someone tax small stocks
| of inventory enough to justify pure JIT?
|
| The bigger reason is to turnover your inventory faster and
| use cash more efficiently. The most basic of finance
| education would tell you about this. There are measures of
| this called inventory turnover, just as there are measures
| for turnover on many many things inside a company that
| gives an idea of how efficiently they use cash. I have
| never in my life seen a financial model on the face of the
| planet consider inventory taxes primarily because they're a
| non factor. Income taxes are a much bigger factor.
| R0b0t1 wrote:
| I have read about the original case for JIT. Toyota and
| others, for example, do not hold the parts but bully
| their suppliers into holding them. They implicitly
| recognise the need for maintaining inventory but have
| forced someone else to bear the costs of maintaining it.
|
| HN is not usually biased against taxes which is the
| subtext I see in your original post. There are bad
| policies and unintended consequences to some taxes.
| kingosticks wrote:
| Cisco are also getting stung at the latest node. For their new
| line of Silicon One switch/router chips they decided to ditch
| their usual fabless partner (Broadcom?) and go direct to the fab
| (I think it's Samsung but not sure - doesn't really matter
| anyway). They did this to save money and also with the intention
| of producing their own merchant silicon to directly compete with
| Broadcom's. This would have been a great plan if there hadn't
| been a major 7nm capacity problem which resulted in the smaller
| players, such as themselves, not getting the wafers they need. I
| don't think there are any public reports of anyone using Silicon
| One yet (except Cisco themselves) but this won't help them win
| any orders.
|
| The car industry might have something to do with it also but it's
| by no means the only cause of Cisco's concerns.
| wayoutthere wrote:
| I've gotten burned by Cisco in a very similar situation. At
| this point they basically lean on their largest telecom
| customers to build their solutions for themz They moved to this
| model because the Comcasts / AT&Ts / Verizons around the world
| started looking at contracting with factories to build their
| own white-label network gear (when you spend $10 billion+ a
| year on network gear, this starts making sense). Cisco's pitch
| is basically "give us all your requirements and we'll build
| whatever you want as long as we have the option to sell it in
| the market".
|
| Never mind that Cisco is an absolutely terrible partner and the
| telecoms realized they were getting almost nothing out of the
| deal, so after a few years the big telecoms all dumped them and
| went with white label factories in China while working with
| American companies like Intel and Qualcomm on large component
| orders to supply the factories. Which left all the small and
| mid-size telecoms in the lurch for a generational upgrade they
| were expecting (which is a lot of why Huawei has so much market
| share in 5G).
| genericlogic wrote:
| L
| gtirloni wrote:
| We often talk about the auto industry as a whole screwing up but
| I wonder if there's an automaker out there that didn't follow
| this trend and is doing fine.
| sethhochberg wrote:
| As usual when talking about supply chains and industrial
| processes, it seems like Toyota managed to do the right stuff
| to avoid delivery problems -
| https://www.bloomberg.com/news/articles/2021-04-07/how-toyot...
|
| They seemingly learned from a few other supplier disasters over
| the last decade, and were better-prepared to deal with
| shortages of critical parts from their vendors.
| gingericha wrote:
| Toyota?
|
| https://www.bloomberg.com/news/articles/2021-04-07/how-toyot...
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