[HN Gopher] Why is there a chip shortage?
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Why is there a chip shortage?
Author : astdb
Score : 26 points
Date : 2021-08-28 08:59 UTC (14 hours ago)
(HTM) web link (www.bbc.com)
(TXT) w3m dump (www.bbc.com)
| SakeOfBrevity wrote:
| TSMC is likely to evacuate out of Taiwan to Phoenix, AZ in the
| next 12-24 months
|
| https://www.maritime-executive.com/article/tsmc-may-charter-...
| glanard_frugner wrote:
| no mention of the SMIC sanctions?
| xyzzy21 wrote:
| SMIC is entirely "trialing edge" process technology-wise. If
| you want 7 nm or lower for competitive advantage, you don't go
| to SMIC. Also you can NOT trust your IP to remain secure if you
| use them.
| glanard_frugner wrote:
| the shortages are not just in cutting edge chips, it's ics in
| general. even mundane things like smart lamps are sold out
| dilippkumar wrote:
| I don't get it.
|
| My mental model is this:
|
| In 2019, all the fabs combined made $X chips per year, and
| projected a growth of $delta_X for the next year.
|
| By the end of 2020, $X + $delta_X is significantly less than the
| actual demand.
|
| There are only three possible expectations:
|
| 1. The fabs made less than $X + $delta_X chips
|
| 2. There has been an explosive growth in sales of existing
| electronic devices exceeding $delta_X that either surprised the
| OEMs or that OEMs failed to communicate to the chip fabs by
| booking extra capacity in advance.
|
| 3. All fabs are not equally equipped to handle fab demand. If an
| OEM changes to a different fab vendor:
|
| 3.a. Some other OEM was denied capacity at the new vendor
|
| 3.b. The capacity that was opened up at the old vendor isn't
| usable by the OEM that got dropped by the new vendor
|
| Has anyone done a deep dive and done the math to see how much
| capacity shortage was due to #1 and #2?
|
| Apple famously moved a huge amount of their chips from Intel to
| TSMC when they made the m1 Mac. Intel has traditionally only used
| their fabs to make their own chips - so the OEMs that got dropped
| at TSMC couldn't just take their business to Intel to rebalance
| the available fab capacity.
|
| Does the amount of m1 macs made/sold help explain the difference
| that #1 and #2 can not explain?
|
| Is there another equally interesting story in the chip fab
| business that would explain this shortage?
| ksec wrote:
| >m1 Mac.......
|
| M1 is 5nm, those are all factored in 5nm capacity planning. i.e
| It is part of $delta_X.
|
| >Is there another equally interesting story in the chip fab
| business that would explain this shortage?
|
| 1. I have always thought the toilet roll incident in pandemic
| would give every one a lesson in commodity and supply chain.
| The Chip shortage is no different. One can also look Lumber,
| Steel or any other commodity. But basically instead of having a
| negative impact on demand, COVID actually make huge increase in
| demand. PC industry saw ~15% increase than previous projection.
| One only need to look how a 5% misprojection of Smartphone
| shipment in ~2018 lead to an avalanche of NAND and DRAM
| pricing.
|
| 2. Old mature node ( sub 28nm node ) has always been in short /
| tight supply for nearly a whole _decade_. You just dont hear
| about it in mainstream media because they are not headline
| worthy and doesn 't drive clicks. Generally speaking the older
| you are and the more you know about an industry, the more you
| realise how news are always very late to the cycle.
|
| 3. None of these factored in trading. If any market is a simple
| game of supply and demand one could always balance things out.
| But you have people betting / trading these commodities. Which
| are not actually "demand" as in usage but investment.
| Considering the premium / profit one could gain from chip
| trading could easily be multiple if not in some cases order of
| magnitude. This also has a negative feedback loop, as wholesale
| or channels see difficulty in getting hold of something they
| will want to stock pile more of it. Something similar to what
| is described as Bullwhip effect.
|
| 4. One often overlooked sector is Crypto. It basically absorb
| any sort of capacity as long as the Crypto dollar is
| profitable. Right now this doesn't seems to add much to the
| constrain. But at one point Crypto players could buy up whole
| patch of wafer capacity at a much higher premium.
|
| 5. Supply will always be much slower to react, the higher
| capital investment, the more risk there is in over supply.
| There used to be an old Intel joke about The most expensive Fab
| isn't leading edge Fabs, but will always be an empty Fab. This
| is just as true today. It is the same with DRAM and NAND, that
| is why you see vendors reluctant to build additional capacity
| until absolutely necessary. ( Whether it is a cartel or not
| depends on your perspective, so I will leave that part out. But
| it is absolutely common for any commodity industry to meet and
| discuss these issues. )
| 908B64B197 wrote:
| > Is there another equally interesting story in the chip fab
| business that would explain this shortage?
|
| Automakers cancelled their orders at the last minute, so the
| fabs sold the slots to other companies.
|
| When demands for cars actually increased in 2020 automakers
| tried to get their slots back but were told to wait for 2021
| for new ones to open. Not sure what the fabs made instead of
| auto-parts.
| xyzzy21 wrote:
| Well, all THREE of those scenarios (and sub-scenarios) are
| routinely happening. And add in some other reasons as well.
|
| 2019 was predicted to be a "low cycle point" going back to
| market projections in 2016. So fabs were already dialing back
| production. This then was amplified by COVID. So production
| volumes were dialed down and the boom was not expected because
| it didn't follow decades established cycles of supply and
| demand.
|
| Fabs are absolutely NOT equal even when they target the same
| baseline features/performance.
|
| Usually fabs from the same company can be equivalent but there
| are plenty of situations when the particular fab for a 2nd or
| 3rd tier foundry will not be up to the same standards so you'll
| often want one particular site to do your parts or to be
| avoided.
|
| TSMC is head-and-shoulders above Samsung, who is head-and-
| shoulders above UMC or GF. Fab services are absolutely NOT
| interchangeable beyond a fairly low common denominator.
|
| Fab services are NOT fungible in the general case between fab
| companies!!
|
| If you are forced accept a 2nd tier fab product, you WILL have
| to change (often radically) what your entire marketing and
| business plan will be. You will NOT be able to promise the same
| things that getting a TSMC product would allow. You will NOT be
| able to charge the same product prices that getting a TSMC
| product would allow. And that assumes you have a top-flight IC
| design team.
|
| This is why TSMC is the gold standard. They are entirely
| focused and have the best of the best of people.
|
| Being one of TSMC's vendors for anything is a very harsh but
| profitable duty; but that's because they are the best and
| demand the best (Intel sort still was like this but nothing
| like TSMC anymore). I've worked with other fab companies, and
| the difference in focus and commitment among TSMC employees is
| very noticeable in the details and attitudes. They are scary
| good.
|
| For at least a decade, TSMC and other top-flight fabs have
| indeed been routinely turning away or delaying fab runs to
| fabless clients who's order volumes or dollar cost was below a
| planning threshold. This is NOT new. So in many ways there's
| been shortages for TSMC level foundry services for more than a
| decade. It's only gotten much worse recently.
|
| TSMC has been conservative with expanding production capacity
| because they are Taiwanese and that's a cultural norm.
|
| Only "knowing someone" and/or becoming personally involved e.g.
| flying to Taiwan or Korea and talking directly with management,
| as a C-level executive of your company, will break that lock
| but only so much - you can and will always be outbid and then
| bumped. TSMC literally turns away most fabless companies that
| request their services from the get-go. You fit their schedule
| because that's where the power is due to demand.
|
| Apple is easily TSMC's largest customer with Nvidia being 2nd
| or 3rd. But Apple has been using TSMC for iOS/iPad processors
| for a long time now so they are already established and the M1
| et al. merely upped an already well-established and reliable
| working relationship to high dollar value. They have a
| relationship and system of working together.
|
| Apple has special priority for everything because of their
| already high volume. When you enter lobbies at TSMC and all
| other Taiwan semiconductor fabs, there's always a sign
| welcoming some Apple employee for a visit that week. Apple is
| super-engaged with its vendors like this. So nothing is left to
| chance for them. Lots of other fabless do the relationship "at
| remote arm's length" which puts them at a disadvantage!
|
| Many IDM semiconductor companies like Texas Instruments, and
| others, are also using TSMC to manufacture many of their
| "standard digital product" ICs as well because the cost to use
| TSMC is cheaper than running 20-year-old+ fabs of their own.
|
| These are multi-year, high value contracts for much of TSMC's
| baseline volume (i.e. there is portfolio value to fulfilling
| them). So these are also impacting supply when demand bumps up
| - long term contracts trump short-term or unscheduled work.
|
| To spin up a new fab costs between US$ 30B-100B and has a 3-5
| year timeline on a good day. So adding capacity is both a major
| capital commitment and never instantaneous. TSMC does have the
| money (hence the new Phoenix AZ fab already under construction)
| but it will not have any impact for a few years yet.
|
| This cost/delay is then multiplied by the tacit technical
| knowledge required which can NOT be easily spun up or
| duplicated. TSMC is adding new factories like crazy but even
| they are limited by reality.
|
| This latter tacit knowledge is why there's so much Epic Fail
| with Chinese semiconductor firms now (MOST are outright
| fraudulent scams, e.g. Evergrande and EVERY semiconductor
| company associated with them) and why no one can just walk in
| and compete with TSMC.
|
| Even Intel has not been able to jump into being a foundry. They
| UTTERLY FAILED when they tried become a foundry about 10 years
| ago - they've been an IDM too long to really have the corporate
| culture to make being a foundry work. As it is now, Intel is
| actually outsourcing a lot of their "foundry wins" to the likes
| of TSMC and Samsung. It's NOT THEM. Same problem to this day.
|
| I work in this market. TSMC is one of my customers. We also use
| TSMC fab services for custom chips we put into our products (a
| recent run we did required we stuff multiple chips from several
| groups into the same multi-chip run to get a spot - we then saw
| them up ourselves and package them).
|
| I've worked in semiconductor since the 1980s. I was involved in
| the creation of the Fabless-Foundry model back in the early
| 1980s (MOSIS, USC-ISI, etc.) I've been inside pretty much every
| fab of every company around the world over the last decades as
| vendor, employee or customer.
| avian wrote:
| M1 is insignificant, or at most just a very small piece of the
| puzzle. There are currently huge shortages of parts that are
| made on 10 year old silicon processes. Those share almost
| nothing in terms of supply chain or manufacturing capabilities
| with state-of-the-art CPUs like M1 or what Intel makes. Except
| maybe at the very lowest levels, like wafer and reagent
| suppliers.
|
| My reading of this whole thing is that we just made a brittle
| system that fell apart at the first slightly larger global
| disturbance (the pandemic).
| diogenescynic wrote:
| It's lean manufacturing and just-in-time inventory. When you
| cancel orders or people can't work for days/weeks/months due
| to a pandemic, it creates a massive backlog. We've created
| incredibly fragile supply chain.
| synergy20 wrote:
| The only real variable I felt is COVID, to a less degree the
| trade war between US-China.
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