The great semiconductor drought may be about to break

Many of theses newcomers will default in 2024 when prices plummet due to oversupply. We had it all in 1999/2000/2001 when the dot com burst brought retail internet fees drastically down. I think it is comparable.

And that's even assuming the new fabs will produce the chips currently out of stock.

The current exceptional shortages are mostly in legacy nodes, whereas newly constructed fabs will mainly be producing on cutting-edge nodes. Building new fabs for legacy nodes simply isn't economically viable.

Once the US has the capacity to replace TSMC then you might see an attack, for totally unrelated reasons of course.

Most lead time updates prior to that were to push back delivery. The derivative from a strong positive to a weak negative is a strong negative.

From Isaac Asimov's Gods Themselves:

“PRACTICAL POLITICS”—AND THE DEATH OF A WORLD

“Let me give you a lesson in practical politics.” Senator Burt looked at his wristwatch, leaned back and smiled. “It is a mistake,” he said, “to suppose that the public wants the environment protected or their lives saved and that they will be grateful to any idealist who will fight for such ends. What the public wants is their own individual comfort.

“Now then, young man, don’t ask me to stop the Pumping. The economy and comfort of the entire planet depend on it. Tell me, instead, how to keep the Pumping from exploding the Sun.”

Lamont said, “There is no way, Senator. We are dealing with something here that is so basic, we can’t play with it. We must stop it.”

“Ah, and you can suggest only that we go back to matters as they were before Pumping.”

“We must.”

“In that case, you will need hard and fast proof that you are right.”

“The best proof,” Lamont said stiffly, “is to have the Sun explode.”

Did you miss the CHIPS act, and the other US and EU actions I can't remember the names of?

I think our politicians are busy thinking how we will not freeze and starve.

Building a fab in close proximity of russia or other unstable areas is probably not a priority right now.

South Korea, Japan and Taiwan are combined 50%+ of semiconductor production and have wages similar to Western Europe, their factories are already heavily automated and well run. These are not sweatshops with people running around hammering transistors with chisels.

I can’t speak for the EU, but the USA passed a bill earlier this year directing almost 300 billion towards growing chip production in the USA.

It's become, at the very least, politically risky to suggest that the tendency of major industries over the past several decades to optimize away everything that doesn't maximize profit could be anything but the Most Holy And True Way, All Hail The Almighty Dollar(/Pound/Euro).

But it's also become painfully clear over the past few years that this tendency is deeply harmful not only to society as a whole, but also to that very industry when any kind of shock to the system occurs, because all redundancy and resiliency to shocks has been optimized away as "wasteful". This includes having more than 1 employee in any given role for far too many companies (see "lean staffing"), which means that if that 1 employee gets COVID, or gets hit by a bus, or quits, or (horror of horrors) even goes on vacation, suddenly there's no one who can do that work at all, and potentially no one who even knows how it's been done.

We desperately need to realign our industries around a) what supports human beings and their needs, b) what ensures continuity of business, and c) what ensures redundancy in the entire system, including the supply chain, so that we can avoid these kinds of utterly foreseeable difficulties. But proposing anything other than what makes the already-wealthy shareholders' currency-denominated high scores go up as much as inhumanly possible is, if it is considered at all, seen as effectively political suicide for anyone not already as openly left-wing as, say, Bernie Sanders.

If we, the people, want this kind of change, we need to signal it by saying so openly, and by voting out the politicians at all levels and in all countries who prioritize business profits over humanity and common sense.

Micron and GlobalFoundries are both building new fabs in New York. GF is looking at a new fab in an existing facility at around $1.5 billion. Micron is building a whole new facility for DRAM production, around $100 billion. Micron is also building a $15 billion plant in Idaho.

https://www.prnewswire.com/news-releases/globalfoundries-pla...

https://blocksandfiles.com/2022/10/05/fabulous-new-york-stat...

TI just bought $1.5 billion worth of old fab capacity from Micron, too. In other TI news, they're ramping up production in a new 300mm wafer fab now, with the first wafers coming just last month. They're also building four new fabs at Richardson, Texas. https://news.ti.com/blog/2022/09/29/tis-new-300-millimeter-w...

Samsung is looking to have a new fab near Austin by late 2023, at about $17 billion.

https://www.anandtech.com/show/16483/samsung-in-the-usa-a-17...

The US government passed the CHIPS Act that invests government money heavily in securing new domestic semiconductor investment. The state of New York and Onondaga County are investing heavily, too. The county is putting $10 million into Syracuse University and $5 million into its community college for research and education around semiconductors.

Until a very short time ago there was a widespread idea belief mutual trade stabilizes relationships in addition to all kind of other nice stuff. Now, that belief has shattered, and it seems to apply only when the participants of the trade have somewhat similar attitudes regarding e.g. democracy. Of course, it takes a while to leave your old loved ideas, but I think that here in the developed countries it would be time to start a real and serious discussion regarding trade policies with countries that are not happy to pursue democratic governance. (Yep, China is the big elephant in this room)

> Do we enjoy being held for ransom?

Yes, one of the main goals of the world bank and western global economic policy after world war 2 is to create an interconnected world where countries like Germany are dependant on Russia in the hopes that this forces peace talks by making war more costly. The idea is that they are also dependent on us and we can sanction countries like Russia or Iran or North Korea into working with us instead of fighting us.

The issue with this policy is that we need to make the first move in good faith but if countries don't return honestly then our sanctions remove luxury goods like McDonalds while their counter sanctions remove necessities like heating. The second part of the issue is that once sanctions have been applied there no second step and the sanctioned country will just ally itself with other sanctioned countries as a matter of necessity thus pushing them further away from us and closer to all out war.

To protect our selves we need to be self sufficient in these matters which makes the whole thing not work as we will have no leverage other than war.

The west does not, generally speaking, support government industrial policy. That is, neither the US and EU political sphere thinks that guiding industrial activity (setting priorities, etc) is a good use of government power. Instead, our political philosophy is that "the market" is the best mechanism to sort such things out.

This is, of course, a gross generalization with lots of exceptions. Especially in the realm of "defense" technologies. But given this philosophical trust in markets to determine the whos, whats, whens, wheres and hows for industries, they tend to intervene late or weakly even when the public clamors for action.

Also... this philosophy has created the wealthiest societies in the history of humanity. And while past performance is not necessarily indicative of future performance... it's certainly something.

To make general electronics (as opposed to semi) supply chain issues worse, we just did a major hit on Chinese semiconductor industry. My impression is that they are not taking it well. Supplying the rest of the world with cheap electronics might not be their highest priority at this point. And it will be hard to produce a price-competitive (obviously US can manufacture anything at high price) alternatives because China has 20-30% (?) lower energy costs and much lower labor and regulatory costs. I guess the idea is to move manufacturing into other Asian countries. But other Asian countries are either China-friendly, or they will have the same higher energy costs as the rest of the world.

The capacity might not be needed, but the political stability may be (or not).

My mom excitedly told me about a large fab coming to NY recently and I told her it likely was not going to be built then pointed to examples where big tech companies have fucked over communities in the recent past.

I think these domestic fans are heavily subsidized and will go forward anyhow. It takes years to bring an advanced fab online so the state of the market in the next 2-3 years is immaterial.

The Bullwhip Effect knows no mercy.

Will this collapse affect the price of popular brands like Mac, Pixel etc?

I would certainly welcome a dramatic price drop. It's ridiculous how expensive some processors have been these past couple of years.

Sounds like good news for companies trying to build right now!

We got an unexpected drop of 20k units of NXP micro's after being cut off completely in September.

That may be true for ST but NXP is still quoting me 60+ weeks for LPC and Kinetis parts. Most of that is targeted to automotive but I don't see a flood of cars coming off the lines either. Where are these parts?

STM32 also seems to be counterfeited more than other lines. Kind of glad I don't have to sift through that right now.

I just bought a used 3060 for $250, definitely nowhere near $2000.

Over a decade ago, I bought a brand new Radeon HD3850 for € 130. At the time, it was one of the best GPUs (the HD3870 was faster of course, but still not that expensive). The past couple of years, it's been impossible to get any GPU for anywhere near that kind of price, and the high end costs 10 times as much. It's completely ridiculous. I just refuse to buy for these kind of prices.

I ordered 4 4GB Pi 4s at $90 a pop in January. They were meant to arrive a few weeks later, but I was a few hours too late to get units from that batch. The next batch would've arrived later this month, but I canceled the order a couple weeks ago. Really hoping I can pick some up for cheaper soon.

What you’re tracking is market price. You’re hoping it falls towards an MSRP or other price.

It is possible that scalpers will delay the prices return to normality for a while, by buying large lots where possible, therefore prolonging the scarcity. However, they'll have to sell them earlier than say those bought a couple years ago. Fingers crossed.

If "everyone knows" via the media that there's going to be a toilet paper run on chips and your business depends on shipping product, you'd be a fool not to stock up while there was still stock, instead of going out of business until the nonsense blows over. So I know a small time Ham Radio kit mfgr (its like a one man shop) who STILL has about three years sales volume of Arduino-alike chips in his closet.

Sucks locking up that much money in inventory AND contributing to a toilet-paper run, but for him it beats unemployment, and for me, I can buy and build his kits which is better than not being able to...

In a greater economic policy way, its an inflation-reducer. He has a huge pile of money locked up in his closet in the form of unprogrammed Arduino chips, instead of hyperinflating stuff he could have bought like a better spectrum analyzer or real estate or whatever else.

Regular cars need semiconductors as well.

Anyway for cars part of the problem originated when with covid they cancelled all orders and the assembly lines for their stuff got converted.

Then their managers layoff workers and periodically go on the news, taking great care of never mentioning that it was partly their own fault.