Part of the problem is that when the supply chain is long and fragile, a perturbation anywhere affects customers everywhere. Kulicke & Soffa has said that they're having trouble getting chips for their machines. That's problematic because they are a semiconductor equipment manufacturer.
The result of shortage is that lead times get longer (not unlike how packets queue for a lossy channel), incentivizing chip customers to order more than they need. This, in turn, further constrains the market.
The trailing edge lithography scanners don't get up to the 180 tons that an ASML EUV machine might weigh, but they're still large and you can't exactly get them with Amazon Prime two-day installation.
Acer and AMD said the shortages would ease this year, but TSMC says they will continue to next year and Intel said yesterday that they think it will take a couple of years.
There's no "push" demand by such people to get exposure, either; they're buying not selling, so they're not needing to market themselves.
And of course, every time anyone on their specific team within the fab gets COVID-like systems, the _entire team_ goes home for two weeks. This has happened several times over the past year.
And then everyone sees each other outside of work anyway. Some of the people at the plant are family, or as close as family. Some go to the same church. Some go camping or fishing together on the weekends
The summary there seems to be "Insufficient investment in 200mm wafers". Combined with everyone's demand forecasts being screwed up due to COVID and being either too high, or too low. Finally, you can't just move from FabA to FabB (even for the same wafer and process size) quickly, so customers can't just quickly migrate to whatever fabs ended up with excess capacity.
"200mm fabs are older facilities that process chips at mature nodes, which range from 350nm to 90nm" - https://semiengineering.com/demand-picks-up-for-200mm/
The high level of uncertainty doesn't help; how sure are you that there won't be a pandemic related demand crash in six months?
From TSMC's Mark Lui:
- Supply chain disruptions from Covid
- US / China trade disputes
- Digital transformation from Covid (increasing demand for chips)
- "Double booking" feedback loop (companies preorder more than needed, fearing fab capacity limits --> makes it seem like there's less fab capacity --> companies book more capacity, fearing capacity limits)...this is not specific to Covid, but heats up in this kind of situation
It's not unlike the situation with PPE manufacturing circa March 2020.
Maybe fabs take longer than a couple years to set up regardless of money spent?
Maybe fabs take a level of expertise that only a handful of people in the world have, and it's a matter of ramping up promising undergrads to that level which will take like 15+ years?
Maybe analysts expect demand to even out so that capital outlays right now don't make sense?
But all of these are surprising to me to the degree that we still don't have enough semiconductors. I'm just hoping for a sort of comprehensive overview of the issue, if such a thing exists.
The AKM fab fire in November 2020 also made the situation worse.
Maybe fabs take a level of expertise that only a handful of people in the world have, and it's a matter of ramping up promising undergrads to that level which will take like 15+ years?
From the start of permitting to first tape out, I've heard five years for cutting edge, three to four for mid range (under 100nm), and two years for older processes. Subtract a year for expansions of existing facilities where hazmat permits and infrastructure already exist.
Far more than a handful of people in the world are qualified to set up a fab but it really is hard, time consuming work that requires a lot of expertise. While most of the equipment in a fab is customized off the shelf (not totally custom but not cookie cutter), each piece has to be carefully calibrated to fit in with the whole.
Stuff like HVAC, which is normally pretty predictable in commercial buildings, has to be custom designed for seasonal variations which differ from region to region while taking into account each piece of equipment's heat generation and stability needs. Tens if not hundreds of different robotic positioning and material handling systems need to be calibrated so that they can move wafers entire meters with a precision and accuracy measured in the tens or hundreds of nanometers. The design of the factory even needs to take into account regional variations in day to day humidity which usually takes a year just in data collection.
Building the concrete shell for a fab is easy. It's filling it with equipment that actually works together to produce cutting edge technology that is the expensive part.
- Demand for electronics as a whole, at all scales (from computers to cars to IOT to industrial controls and all kinds of other things that we don't think about) has been shooting up for the last decade (without compensating expansion in fabrication capacity). This is the 3rd serious supply shortage we've seen in electronic components in the last few years (anyone else remember seeing MLCC lead times hit 100 weeks in 2017-2018?).
- All of these supply lines running all the way back to the raw silicon operate with very lean (or no) supply buffers. Think "suppliers making deliveries directly to the factory floor" lean. These sorts of systems are not resilient, and do not respond well to shocks (like suppliers having to shut down due to a global pandemic).
- As has been commonly noted, there have also been demand shocks, where electronics consumers (especially car companies) who are normally operating on timelines forecasting out 6-24 months forecast reduced customer demand, reflected that in their orders, and then had to adjust back when demand for cars came back.
- Similarly, with people locked down and working from home, demand for electronics both for professional use and as a replacement for entertainment options has expanded.
- Finally, there are rumors (that I haven't been able to confirm in a meaningful way) that some large Chinese manufacturers have been stockpiling components in anticipation of further tariffs, sanctions and trade tension.
I did, even Chinese domestic market still has months long passives shortages even today.
> - Finally, there are rumors (that I haven't been able to confirm in a meaningful way) that some large Chinese manufacturers have been stockpiling components in anticipation of further tariffs
Actually plain speculations, some times by people very far from semiconductors market, just like with masks, baby formula, apartments, pork, cement, aluminium, stocks etc.
Or, you know, by the manufacturers themselves: https://www.bbc.com/news/technology-54266531