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Wednesday, April 21, 2021 by Christoph.Schmid|Comment 0
within category Semiconductors,Automobile,Fabs,Datacenters,PC peripheral product,Smartphones,Skyworks Inc,Qorvo Inc,STMicroelectronics NV,Intel,TSM,AMAT,KLAK,TER,NVDA
Semiconductors

In the age of Covid-19, semiconductors are in strong demand, and the impact is not equal across all sectors.

Semiconductors are used everywhere; the chips power massive data-centers, transmission towers, modern autos, and countless digital devices and sensors. Driven by a massive demand, as well as a fire at a foundry, production was pushed to the edge within a few weeks, and the shortage is here to stay.

During Covid, demand for chips powering laptops, gaming devices, and internet infrastructure skyrocketed, while chip demand for auto and industrial uses plummeted. When the factories that make basic computer components couldn’t make them fast enough, their already-long customer waiting lists got even longer. With demand remaining high, existing chip-making facilities damaged, and no extra backup-making capacity available, for the short term the shortage is expected to last at least until next year. 

 Reliance on semiconductors and a global digital infrastructure has a deep impact on the future of some sectors. Let’s explore the ramifications.

Automobile industry

The chip shortage is effectively crippling the auto industry. The worst effects of the phenomenon are crucial as needed parts to produce finished cars and trucks are unavailable, causing automotive manufacturers to halt production. Bernstein analyst Stacy Rasgon highlighted in a recent interview that the automobile industry shows a stark example of how a disruption of chip supply can affect other industries. In the case that the shortage can’t be resolved, some 40% of global GDP is at risk in DM.

Personal computers

PC sales got a huge shot in the arm with Covid as the world scrambled to become adapted to working and attending school from home. Research firm IDC expects sales volumes to grow by 18% in 2021 with shipments of 357.4 million, after rising nearly 13% in 2020.

Makers of CPUs, the chips that act as the brains for every personal PC and public-cloud data center, and GPUs, the graphics processing unit, stand to benefit in a market that is dominated by Intel, Advanced Micro Devices Inc., and Nvidia. More advanced GPU units are also used in data centers, yet there does not seem to be a supply-constraint, but lead times are exceptionally long because Nvidia still needs to get the components to build the units.

 

Smartphones

Smartphones are also being hit with the supply shortage. Major supplier Qualcomm Inc. said recently that they would have sold much more product had it not been for supply constraints. Yet, this industry sub-sector appears to be exposed in a limited manner. MediaTek Inc., Broadcom Inc., Skyworks Inc., Qorvo Inc., and STMicroelectronics NV, amongst others, did not report major concerns. The sector appears to have geared-up for the roll-out of 5G-enabled units long before and with ample room to maneuver through some constraints.

 

Fabs

“Fabs,” or foundries, are what the semiconductor industry calls the complex manufacturing plants where silicon wafers used in computer chips are fabricated down to billionth-of-a-meter accuracy. When the chip shortages during COVID-19 first became evident, fabs world-wide were already running at capacity and had order backlogs that ran as much as several months.

 Major companies such as TSM, INTC, and MU mentioned that they plan to invest more than $150 billion to upgrade existing fabs. Yet, it will take about three years for these units to come online. In the more immediate future, the major beneficiaries in this capex cycle are expected to be Lam Research Corp, KLA Corp, Applied Materials, ASML Holdings, Entegris Inc., and Teradyne Inc., amongst others.

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