Move Over GPU Shortage, Here Comes the CPU Materials Shortage

Tokyo-based Showa Denko supplies chemicals and other base materials to companies like TSMC and Toyota. It provides these materials early in the supply chain, so price changes typically affect upstream manufacturing costs. Bloomberg reports the company has already experienced a dozen price hikes this year alone, with more on the way. The catalysts for this upheaval are COVID-19 lockdowns, the war in Ukraine, and a weakening of the Japanese currency. Showa Denko’s Chief Financial Officer Hideki Somemiya told Bloomberg the pricing situation has caused it to begin dropping unprofitable product lines as a result. He also doesn’t expect the situation to improve until sometime in 2023 either.

“A big theme this year common to all the players in the materials industry is how much cost burden we’d be able to convince customers to share with us,” he told Bloomberg. “The current market moves require us to ask twice the amount we had previously calculated.” Bloomberg has previously reported that both Samsung and TSMC have already notified their customers of impending price hikes. It’s not clear what TSMC is planning, but Samsung is reported to be looking at a 20 percent price increase. The impact of these price changes will likely be felt far and wide. The article says it will affect consumers of “durable goods,” which are products meant to last a long time.

This is just another factor that is contributing to a period of uncertainty for the semiconductor industry. Previously we noted the industry at large was experiencing a sense of “pessimism.” This is due to the economic forces driving up prices and possibly even delaying products. Digitimes just reported that TSMC’s three biggest customers — Apple, AMD, and Nvidia — have already asked it to reduce future wafer orders.

Such an unprecedented request is causing anxiety throughout the industry. Silicon customers rarely look to scale back plans they made years ago. All this will lead to an interesting second half of 2022. AMD, Intel, and Nvidia are looking to launch their next-generation products in an uncertain environment. With the GPU shortage officially over, it remains to be seen what pricing and supply will look like. Given the current inflation levels, as well as the rumored performance levels on offer, it’s not hard to predict next-gen GPUs and CPUs will cost a pretty penny.

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