CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in April

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How are companies responding to the chip shortage and what are policymakers commenting? Here we sum up the most important events related to the global shortage of microchips. The article is updated continuously.

Russia forms a drone and microchip investment fund

Russia’s technological advancement initiative has established a joint venture fund to invest in drones and microchips, amid shortages that have been exposed by the current war in Ukraine. The initiative, which was created by President Vladimir Putin in 2014 to ensure Russia’s long-term technological leadership, will now be supported by a new investment partnership known as NTI Venture Funding, which is expected to invest 6.4 billion rubles ($82.2 million) into 20 domestic projects by 2029. Projects include unmanned aviation, microelectronics, robotics, wireless communication, and cargo delivery.

According to the Russian business daily Vedomosti, the fund will seek to invest in projects that are deemed a “state priority” this year. “If we don’t currently have projects in a number of critical technologies, we’ll first invest in relocating engineering and nurturing our scientific and technological base,” Dionis Gordin, the director of investment at the NTI Project Support Fund, told Vedomosti.

Since the war in Ukraine, Russia has faced a microchip deficit as key exporters have embargoed supplies as part of ongoing sanctions.

China seeks to rapidly fill skills gaps with courses and pay hikes

China is currently ramping up its efforts to develop home-grown semiconductor talent as it seeks to fill major skills gaps that have been made worse by U.S. efforts to limit China’s access to its advanced chip technology. The number of students enrolling in undergraduate and postgraduate courses has surged in the last five years due to new funding packages for China’s top universities, as well as a boom in smaller private schools. Some graduates with degrees in other areas are being lured into the industry at a time when entry-level salaries have doubled.

China faces a shortage of an estimated 200,000 industry workers this year, according to a white paper jointly published by the China Center for Information Industry Development, a government think tank, and the China Semiconductor Industry Association, a trade group. Closing this gap is growing even more critical as the U.S. looks to completely cut China off from global supply chains.

CHIP CRISIS

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GM-GlobalFoundries partnership likely to set a trend, analysts say

A new partnership between General Motors (GM) and GlobalFoundries is likely to set a trend say analysts, as automakers face semiconductor shortages for years to come.GM and GlobalFoundries last month made what it calls a “first of a kind” pact under which the New York–based chipmaker will manufacture for GM’s key chip suppliers. The partnership comes as shortages of automotive chips continue to constrain automobile production even as electrified and autonomous vehicles are expected to double vehicle chip content during this decade.

The deal between GM and GlobalFoundries will help to tighten up a complicated supply chain that includes automakers, integrated device manufactures, subsystem manufacturers, distributors, and chip suppliers. Indeed, the complexity of this chain is thought to have contributed to current chip shortages.
“The fact that now we have a direct relationship between these two ends of the supply chain is extremely important,” Kamal Khouri, VP of the automotive business at GlobalFoundries said in a recent interview with the EE Times. “It solidifies our commitment to automotive.”
The partnership reduces risks for GM and GlobalFoundries with a multi-year agreement that provides predictability in terms of how many cars GM will produce per year and the number of wafers GlobalFoundries will supply.

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Jaguar Land Rover sales rise as the chip shortage eases

"Gradual improvement in chip and other supply constraints" has helped sales to increase at Jaguar Land Rover (JLR), the British automotive giant recently announced.JLR, which has sites across the UK’s West Midlands and North West, confirmed that its wholesale volumes for Q1 2023 were 94,649 vehicles, up 19 % compared to the prior quarter ending December 31, 2022, and 24 % compared to the same quarter a year ago. Compared to the prior year, wholesale volumes were higher in all markets led by overseas (62 %), UK (24 %), Europe (22 %), China (17 %), and North America (2 %), JLR added.

JLR also revealed that its retail sales for the same quarter hit 102,889 cars, up 21 % from the previous quarter ending December 31, 2022, and up 30 % compared to the same quarter a year ago. For the full year to March 31, 2023, wholesales (excluding China joint venture) were 321,362, up 9 %, and retails were 354,662, down 6 %.

New Europe-led semiconductor consortium secures funding

SEMI has announced that SEMI Europe has secured up to €4 million in funding to develop the European Chips Skills Academy. This new initiative hopes to solve critical skills and talent shortages across Europe’s electronics industry. The European Chip Skills Academy will expand on the EU Chips Act to support Europe’s microelectronics ecosystem and attract new talent. This will be achieved by delivering targeted training across Europe in key microelectronics fields such as automotive. The money, which the European Commission’s Erasmus+ Programme has provided, will fund the academy for four years.

“The pan-European alliance guiding the European Chips Skills Academy will leverage the diverse and considerable strengths of its many partners from across the microelectronics’ ecosystem and industrial value chain,” said Ajit Manocha, President and CEO of SEMI. “The project aims to bring greater strategic foresight to the evolution of professions and skills in the industry by applying evidence-based, data-driven success metrics to workforce development.” The initiative is backed by more than 30 partner research organizations, vocational and education training providers, certification agencies, and industry stakeholders.

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Samsung cuts memory chip production following a drop in profits

Samsung Electronics has reported a major drop in its quarterly operating profits, prompting the company to reduce its memory chip production. The South Korean tech giant pointed at a slowdown in the global economy and reduced demand as the main reasons behind this decline.

According to preliminary figures released by Samsung, operating profits in Q1 2023 fell by 600 billion won ($455 million) compared to the same period in the previous year. Samsung’s sales have also dropped sharply, with many consumers now less inclined in buying new electronics due to economic uncertainty and the pandemic.

While demand for memory chips increased during the first coronavirus lockdowns as consumers bought new electronics to use at home, the industry is now struggling with a chip shortage. Many manufacturers are now finding it challenging to balance their inventories with current demand, which makes it more difficult for companies like Samsung to maintain high levels of production.

Taiwan looks to recruit foreign graduates to fill skills gaps

Taiwanese companies can now recruit foreign graduates directly from the world’s top 500 universities, as part of new plans to fill major skills gaps in the country’s semiconductor industry, it was recently announced by the country’s Minister of Economic Affairs, Wang Mei-hua. Wang made the announcement during a television interview, referring to a 2021 amendment to the Act for the Recruitment and Employment of Foreign Professionals that enables the hiring of new bachelor’s degree holders from the world’s top 500 universities as ranked by the Ministry of Education. Prior to this amendment, most university graduates required either a master's degree or two years of professional experience to work in Taiwan.

The Ministry of Economic Affairs on Monday said that it has planned a series of campus recruitment events at universities across Southeast Asia this year. Events have already taken place in Singapore and Malaysia, and similar events are to be held in the Philippines next month, and in Vietnam and Indonesia in September.

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TSMC revenues drop for the first time in four years

As the ongoing chip shortage shows signs of receding, companies like Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, are beginning to see their revenues contract for the first time in many years. Samsung, for example, recently announced that it would be scaling back its memory chip production in response to falling demand for DRAM and SSDs.

As for TSMC, which holds 56 % of the overall semiconductor market, the company missed its sales targets for the first quarter of this year, a clear sign of dwindling demand for consumer electronics products like game consoles, phones, and PC components. This drop in demand comes at a time when many consumers around the world are being impacted by a rising cost of living and inflation.

U.S. new vehicle sales rise in Q1 2023

Sales of new vehicles in the U.S. rose by 7.5 % in the first quarter as supplies improved and high prices eased a little, as the global shortage of computer chips began to wane. However, the average auto-loan rate hit 7 % during the same quarter, leaving open the question of whether automakers will be able to offer reduced rates to keep buyers interested throughout the remainder of the year.

U.S. automakers sold 3.59 million vehicles during the first three months of 2023, a slight increase when compared with the 3.34 million sales achieved a year earlier. Results from companies were mixed. Some thrived with better chip supplies, while others continued to struggle.

General Motors' sales jumped 17.6 % over a weak first quarter last year as Buick brand deliveries doubled. Meanwhile, Nissan’s sales leaped by 17.3 % and Honda saw an 11.7 % increase. Some analysts have said that, in order to keep sales moving, automakers may need to begin offering subsidized loan rates, which could cut into profits.

You have missed some chip shortage news? This is what happened before:

• Global chip shortage 2023 - updates in March - click here for reading!

• Global chip shortage 2023 - updates in February - click here for reading!

• Global chip shortage 2023 - updates in January - click here for reading!

• Global chip shortage - outlook for 2023 - click here for reading!

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