In a new chapter of the saga about the crisis of the chips and how this global shortage of semiconductor is leaving stock to most industries , a handful of scholars and doctors in nanotechnology tweeted began to question whether producers should not be building like crazy new factories to produce more of these little circuits and thus end once and for all and forever with the lack of supplies. Error.
While it is true that the most important companies in the field of chip manufacturing are looking for new destinations in which to expand , especially in Europe so that our continent stops depending so brutally on external semiconductor production, it is also true that Rome was not made in a day: industry experts point out that building one of these integrated circuit factories, which has the latest technologies and advances, is not a quick process and it would take about four years for it to be fully operational .
However, the reality is that the solution that semiconductor manufacturers propose for this crisis is none other than something simple and effective: produce more chips, so that it can respond to the current high demand and even prepare the ground. for an increase in said demand that will take place in a few years, according to the opinion of all experts in the sector. And for this, since they are already manufacturing to the maximum of their capacity, what they need is to build new plants where they can manufacture more circuits.
Let’s start with the basics: what is a semiconductor and how is it produced?
A semiconductor is an element that behaves either as a conductor or as an insulator depending on circumstances such as atmospheric pressure, temperature, the magnetic field, the radiation that falls on it or the electrical charge.
It is precisely the property of going from isolating to conducting depending on the electrical charge that makes semiconductors ideal for building electronic components. Currently most of the sectors use them to manufacture their chips or integrated circuits .
To get an idea, the latest data from the consulting firm Gartner put the revenue in 2020 of the world semiconductor market at 466,237 million dollars -about 380,000 million euros-, 10.4% more than in 2019. And the main producers already They have announced that in 2021 they have far exceeded those figures, this being undoubtedly the year with their best historical results.
As you know, Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest chip manufacturer and its home country is responsible for the production of around 20% of all semiconductors globally. Businesses there, including TSMC, have expanded to meet increased demand. The countries that follow are also Asian: South Korea produces 15%, with Samsung as the main manufacturer, and Singapore 7%.
According to Gartner, the world’s top three suppliers – Intel , Samsung and SK Hynix – control almost 35% of global sales. Among manufacturers, Taiwanese TSMC occupies the first position with 58.8% of the market by revenue , followed by UMS, which has a 7.8% market share.
Among the top 10 semiconductor manufacturers in the world, only one is European, NXP. Europe led the world two decades ago thanks to its strong consumer electronics industry with first-generation mobile phones made by Nokia, Ericsson and Siemens. But after these fell in popularity, chip production mainly shifted to Asia .
Typically, TSMC and the rest of the companies in the sector are exposed to the highly cyclical nature of the semiconductor industry . During spikes, they need to make sure they have enough production capacity to meet strong customer demand. And, during recessions, they must deal with excess capacity due to weaker demand and high fixed costs associated with their manufacturing facilities.
However, at this time we are faced with a different situation. The deep semiconductor shortage in which we have been plunged for more than a year began to develop much earlier and part of the ‘fault’ lies with the global health crisis that broke out in early 2020: confinement, teleworking , online classes … They caused purchases of technological equipment to skyrocket, causing an imbalance between supply and demand. To this must be added that the industry that produces the chips also had to paralyze during the first months of the pandemic.
What does it affect if there are not enough chips?
You may think of computers, mobiles and consoles when you hear about this crisis – another one. However, it is not only the sectors dedicated to the manufacture of electronic devices that are suffering the effects of this shortage: one of the most affected industries is the automotive industry, with a significant lack of supplies to develop automobiles .
The chip drought caused a million fewer cars, 5% of total production, to be produced in the first quarter of 2021 compared to the same period last year, according to market analyst IHS Markit.
Cars, devices and household appliances are three of the production sectors that have been affected the most due to their enormous dependence on semiconductors, but they are not the only ones that are going through a difficult stage.
Does this touch Spain at all?
Consumers are not oblivious to this problem and we are currently paying a very important surcharge when we buy some products that have a very clear dependence on the production of chips . Two good examples of this are graphics cards and game consoles .
There is no Invisible Friend that complicates you with these ideas.
That when they are available, because many manufacturers are having to remove their devices from little to little stock due to lack of components, as is the case with Sony and Microsoft with their new PS5 and Xbox Series X consoles .
How long is the shortage expected to last and what can we do?
Global demand for chips has been cyclical overall for the past few decades . However, the unabated growth of new technologies, including cloud services, 5G networks, and artificial intelligence services, is fueling a ‘supercycle’ of chip upgrades that could last much longer than a traditional cycle.
Experts do not believe that this drought will pass anytime soon. The chip crisis will be completely over in 2023 , according to Baris Altinkaya, Marketing deputy director of Vestel, a television manufacturer that accounts for 18% of sales in Europe. Intel also maintains that the shortage of chips and, therefore, the increase in prices will continue for a couple of years and that they will surely affect the current Christmas season.
Its CEO, Pat Gelsinger, predicted for the BBC that there may be “some promissory notes under Christmas trees around the world this year” instead of gifts. “Everything just falls short at the moment. And even if my colleagues in the industry and I are working like crazy to catch up, it will take a while [until everything recovers] “, he explained, noting that things would improve” gradually “next year, but that they are unlikely to stabilize until 2023 .
Some of the main semiconductor manufacturers are already investing a good part of their resources in starting up new factories . But as we say, there is no margin to solve this crisis in the short term, since building factories to produce chips is not something that can be done from today to tomorrow.
At the end of last March, Gelsinger himself announced that the company he directs will invest approximately 20,000 million dollars to set up two new factories on its campus in the town of Ocotillo, Arizona (United States). It also has its sights set on Europe to establish new plants on our continent that supply European industries.
However, Intel is by no means the only chipmaker that has already started building new factories . TSMC, which is currently the largest producer of integrated circuits on the planet, has already started work on a new factory in Arizona (United States) that will cost 12,000 million dollars. GlobalFoundries announced in mid-July that it is going to build a new factory in New York State that will allow it to double its integrated circuit production capacity. And Texas Instruments began in May the construction of a new chip factory in Dallas (United States) that will cost 3.1 billion dollars, and has confirmed that it plans to build another one in the short term.