The bad news (for consumers, not the company) was revealed in a quarterly earnings call this week. On the call the company, which makes silicon wafers for companies like TSMC to turn into chips, said it already has orders for its 300mm wafer supply for the next five years. The company also noted that it even though it doesn’t take long term orders for its smaller 150mm and 200mm wafers, which it says are used for “automotive, consumer, and industrial,” it still expects demand to exceed supply for many years to come, which is painful to type. Sumco also stated the price for wafers increased ten percent in 2021, and that it expects prices to continue to go up for at least the next three years. This follows an earlier report from Digitimes about TSMC raising prices for its customers, such as AMD and Nvidia, due to its own costs going up.
Even more troubling is Sumco said in its earnings call that it has no way to increase production, despite there being ample demand for it with customers clamoring for more wafer capacity and long-term contracts. It says it is experiencing a supply-demand imbalance across its entire product line. The lack of any viable way to increase production was the number one issue highlighted recently by the US Department of Commerce in a report on the semiconductor shortage. In the report the agency asked silicon fabs about their current production capacity, which was reported to be above 90 percent. This highlights the same issue Sumco is describing. With no way to increase production at this time, the shortages will continue far into the future.
Intel CEO Pat Gelsinger also recently described the current demand for semiconductors as “exploding,” leading to his prediction that the shortage will last at least through 2023, if not longer. It’s also one of the main reasons his company recently announced an all-new $20 billion fab of its own in Ohio. However, that facility won’t be cranking out chips until 2025 at the earliest.
AMD’s CEO Dr. Lisa Su was a bit more upbeat in her recent predictions, however, stating at a conference in September of last year that she anticipated supply would begin to increase in the second half of 2022. The main reason for her optimism was that more fabs would be coming online eventually to increase production, and with vaccines for COVID-19 rolling out, there would hopefully be less chance of an outbreak shutting down a factory abroad. But like we said at the time, the future is unpredictable, and we had never heard the word “Omicron” back then, so the truth is nobody knows when or how this will all shake out. Sadly, it seems the most clear-headed take is that it will continue for the foreseeable future, with no end in sight.
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