The United States has conducted a major investigation into the shortage of chips that affects all electronics markets. The resulting report, released on January 25, 2022, explains how manufacturers got there and why it will still continue at least until the end of the year… or even more.
We started to talk about the problem of shortage of components at the end of 2020, when the Xbox Series S/X and PlayStation 5 were released. At the time, it was impossible to find them in stores. The reasons given were threefold: impossible to obtain processors, difficulty in finding a place on the ships to deliver the consoles and a global epidemic leading to temporary closures of production lines.
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15 months later, it is always very complicated to buy one of the next-gen consoles. In an interview with the New York Times, Phil Spencer mentioned one of the reasons he believes explains why the Xbox Series X is very difficult to buy: demand greatly exceeds supply. Moreover, he claims that his latest console is selling better than all its predecessors. Does he still manage to produce enough to deliver to distributors? Certainly not.
The shortage of chips is due to the sharp increase in demand for semiconductors
In September 2021, the US Department of Commerce therefore launched an investigation to understand the issues preventing a return to normal. And the conclusions of the report were published on January 25, 2022. Three problems were detected. The first is a considerable increase in demand for semiconductors. Many industries have started to heavily use processors, especially automotive, with the rise of electric cars. Just look at Tesla’s rave sales figures in 2021 to be convinced. But the electric car is not the only culprit.
The second key point is the pandemic that has caused consumers to hunker down at home for work and play. They bought computers, televisions, game consoles and tablets. Not to mention smartphones and other electronic goods. All use chips. According to the founders, the demand for processors in 2021 is 17% higher than in 2020.
Chipmakers are the bottleneck causing the shortage
The third point raised by the American report concerns the component manufacturing plants. That is to say those who manufacture the silicon discs and transform them into processors or transistors. As a reminder, when Apple, AMD or Qualcomm develops a component, they do not manufacture it. They are called “fabless founders” (without factory in VF). They entrust this task to a factory, such as TSMC, Global Foundries or Samsung. Intel has its own factories.
These factories are therefore the bottleneck. Why ? Because their production lines are not always adapted to demand. These have gradually reduces their ability to produce etched components at 40nm and above. The medical, automotive and telecom sectors are particularly affected. Consequence: on certain product lines, foundry stocks have gone from 40 days ahead in 2019 to only 5 days in 2021. That is a division by 8. With the risk of a stock shortage which leads to a stoppage of their customers’ factories.
There will be no improvement in 2022 and certainly not even in 2023
Survey respondents believe that the problem will not be resolved immediately. At least not in the next six months. Indeed, component manufacturers have invested heavily to increase their production capacities by creating new factories. Global Foundries is moving to New York. Samsung has started factory construction in Texas. And Intel is also going to develop one in Ohio. But some plants won’t be ready until the second half of 2022. And others won’t be ready… until 2024!
This is partly in line with the statements of AMD’s technical director who affirmed last November that the shortage of components will not be resolved before 2023, confirming half-word that it will always be difficult to obtain an Xbox Series X or a PS5. again this year and next year.