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Global semiconductor shortage puts pressure on tech supply chain

Tech industry one of few sectors to experience growth during pandemic

(Getty Images)

(Getty Images)

TAIPEI (Taiwan News) — Soaring demand for electronic devices such as smartphones, computers, gaming consoles, and cars has created a global shortage of chips, leading to manufacturing delays, as consumer demand bounces back amid the pandemic.

Chips that are used in processors and drive integrated circuits, as well as those that are used for power management and connectivity, are made by companies like Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics (UMC) which are then shipped to various chip developers further down the supply chain, according to Nikkei Asia. The contract chip manufacturing market is dominated by TSMC, followed by Samsung, UMC, GlobalFoundries, and Semiconductor Manufacturing International Corp (SMIC), according to Trendforce data.

Surging demand for products like laptops, tablets, and mobile phones in the U.S. and Europe due to pandemic restrictions and a quicker than expected recovery in China for electronics and larger items like cars are helping to fuel the shortage, according to Reuters. “Since all compete for the same fab resources the shortage is across all of these sectors and others as well,” said Kevin Anderson, a senior analyst at Omdia.

Other factors affecting the chip shortage include stockpiling by telecoms giant Huawei ahead of U.S. sanctions that went into effect in mid-September, and Huawei rival Xiaomi looking to gain market share by ramping up orders of components.

The overwhelming demand has meant that 200 mm foundries like UMC — which tend to make older, less sophisticated chips — have struggled to increase production after demand picked up faster than expected. Most of UMC’s capacity is fully booked through the second quarter of next year, while a portion of its production lines is not available until the end of next year, Nikkei Asia said.

An official at South Korean foundry DB Hitek, which makes chips for Apple tablets, said its 200 mm facilities will be running at full capacity for the next six months, Reuters reported. DB Hitek said supplies are expected to be tight until the second half of next year.

Most of the production capacity at TSMC, the world’s largest contract chipmaker, is also fully booked through the third quarter of 2021, Nikkei Asia reported. TSMC told the outlet that demand currently looks “robust.”

The tech industry has been one of the few sectors that experienced growth during this year’s COVID-19 pandemic. The component shortage points to the industry’s overall optimism for a robust recovery next year, per Nikkei Asia.