Semiconductor shortages will certainly rise well into 2022, after the chip provider for some of the world’s biggest tech companies says production will struggle to meet growing demand for its products.
In an online conference this week, TSMC CEO Dr. CC Wei said that TSMC Foundry production capacity was still insufficient to meet demand for its chips, particularly those used for high-performance computing (HPC) systems. Orders for components and devices using the company’s 5G equipment. 5nm process node.
The company’s other process nodes, which are heavily used in automobiles, IoT and server equipment, are also thinner, according to Taiwanese news outlet United Daily News. While TSMC is not as big as Intel in terms of revenue, it has a much more diverse customer base as its chips are used by companies like Apple, AMD, Qualcomm to make everything from networking equipment to iPhones and graphics cards. .
If TSMC is spread thin across its most critical process nodes, a far greater number of industries are going to be affected by constrained capacity than if Intel were to face similar production constraints that affect the “traditional” computing market more than anything else. does. .
In fact, Intel is even starting to contract with TSMC to make various chips and make chips for other companies like Amazon and Qualcomm to meet global demand for semiconductor components.
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The only way to ever address the chip shortage will be to build more foundries to increase capacity, as demand for this most essential component of modern technology is going to increase in the future as everyday life becomes more and more digitized. . Smartphone for smart city.
Dr. Wei also said during the conference that the company expects to begin mass production on its 2nm process node in 2025, and that the company started work on a new foundry in Arizona based on its 5nm process earlier this year. started, which is expected to be completed. in 2024.
Rival semiconductor fabricator Samsung, meanwhile, is in talks to invest $17 billion in a second semiconductor foundry in Texas, in addition to increasing investments at its existing plant in Austin to increase capacity.
Intel is set to spend about $20 billion to build two new foundries in Arizona and recently signed a contract with the US Department of Defense to build capacity for the company’s most advanced node, 18A, which will be put into production in 2025. Hoping to start use.
Chip shortage will never go away, know why
While most industry professionals will tell you that they expect chip shortages to last through 2022, this can give the impression that sometime in 2022, the chip shortage is going to end and you’ll finally be able to buy a PS5 or Best Buy. Graphics cards that are all but vaporware right now.
That’s not quite what they’re saying, however, as businesses project terms over a certain period of time to plan their business strategies, production, and inventories. Given the number of variables involved in this kind of financial modeling, you can really take it that far before your numbers become unreliable. That’s what CEOs really mean when they say the chip shortage will last until 2022.
That means, in 2022, they can all show up at conventions to say that the chip shortage will last until 2023 or 2024, and honestly, that’s going to happen until the new reality is that there’s a shortage of this chip. There is no shortage at all. , but a systemic deficit kicks in.
Chip foundries take years to build, so many new plants coming online in four years are going to do anything to meet the demand for chips as it currently exists. And as anyone with a cellphone that starts to degrade in performance after a few years can tell you, just because TSMC or Samsung coined the chip that drives your phone today doesn’t mean that They have met your demand, at least not permanently. .
Every couple of years, those foundries will have to fab out all the new chips to power your next phone and all that follows. On top of that, they now also have to fab your new Wi-Fi 6 router, and the chips that power your Nest Hello doorbell and your car.
They have to manufacture chips to meet the demands of all the new customers they are picking up in parts of the world that were neglected in the Global South and many parts of Asia for the past twenty years. A rapidly growing consumer market has begun to be seen for these items.
And that’s just consumer electronics, we’re not talking about all the new networking infrastructure we’ll need to delay the 5G rollout, and then 6G when it comes down the road.
Demand is only increasing, and its growth is likely to be closer to exponential rather than linear. When we need to multiply the number of plants, adding the number of manufacturing plants to maintain will not be enough.
Above all, you have a physical supply chain that can disrupt production capacity at any point along the way, something we’re seeing even with the recent port crisis in the US. At all times, demand may slow down or even be slightly flat for a while, but it will never suddenly drop in a way that triggers production.
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