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CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in August

From Luke James Reading Time: 11 min

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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.

The global chip shortage emerged in 2020 and is an ongoing problem where the demand for integrated circuits such as computer chips is greater than supply.
The global chip shortage emerged in 2020 and is an ongoing problem where the demand for integrated circuits such as computer chips is greater than supply.
(Source: Quardia Inc. -

Intel completes final state of testing at new Fab 34 plant in Leixlip

Intel has completed its final stage of testing at its new Fab 34 facility in Leixlip, Ireland. The conclusion of this testing phase now enables Intel to move towards beginning full production at the site before the end of this year.

Intel said Fab 34 had begun running its “first full loop” of silicon, meaning that the silicon wafers have gone from start to finish through consecutive steps in the cleanroom without any problems. “This is a key step in the preparation toward ramping full production silicon,” an Intel spokesperson said. “Fab 34 is excited to take one step closer to delivering Intel 4 products to our customers.”

Initial works on Fab 34 began in 2019 and involved a €17 billion investment. The new facility has created 1,600 new, permanent jobs in Ireland and has doubled the company’s manufacturing space in Ireland.

China and Huawei said to be building ‘underground semiconductor railroad’

Chinese tech giant Huawei has received an estimated US$30 billion in state funding for a shadow semiconductor fabrication network in a bid to evade U.S. sanctions. This is according to a recent article by Bloomberg which reports claims made by the Semiconductor Industry Association (SIA) that Huawei has two chip fabrication plants and is building three more.

Under U.S. sanctions, Huawei and other Chinese tech companies are prohibited from importing microchip technologies made by U.S. companies. However, the SIA believes Huawei may be importing restricted chips and chipmaking equipment through secret channels in something of an underground railroad for semiconductor technology.

According to the SIA, Huawei is building these foundries under different corporate identities near the company’s Shenzhen headquarters. Although most semiconductors are designed in the U.S., much of the manufacturing is handled by specialized foundries run by TSMC in Taiwan.

Intel still waiting for federal CHIPS Act funding one year later

A year after the U.S. CHIPS Act was signed into law, money from the US$52.9 billion bill is yet to begin flowing to Intel and many other semiconductors who are relying on it as part of their plans to establish new production centers throughout the country.

The U.S. Department of Commerce has not yet said when the first awards will be made, only that there has been significant interest in the money from the likes of Intel, which is spending US$20 billion on two new plants, and other major manufacturers.

“We will start to give out the money later this year,” Secretary of Commerce Gina Raimondo told CNBC this month. “We’re pushing the team to go fast, but even more important, to get it right.” In response, Ohio’s Lieutenant Governor, Jon Husted, said, "The federal government needs to deploy the money as fast as possible with as few regulations as possible."

North American plants cut 49,330 vehicles from production schedules

North American automakers cut 49,330 vehicles from production schedules at their plants in the week commencing August 14th due to the ongoing semiconductor shortage. This information comes from estimates published by AutoForecast Solutions, who said that it was only in North America where vehicles were cut for that week. Year-to-date estimates for every other region of the world were unchanged from a week earlier.

Despite this, Sam Fiorani, vice president of global vehicle forecasting at AutoForecast, said that the shortage is yet to be “relegated to the history books,” and that automakers could be unwilling to sacrifice the high margins that low vehicle supplies have created. "The shortage provides an excuse for reduced access to high-demand vehicles, raising their prices and increasing their profit levels," Fiorani said.

North American plants have cut a total of 849,512 vehicles from production schedules so far this year. AutoForecast projects that a total of 969,923 will be cut by the year’s end.

Nvidia reportedly tripling production of H100 AI chip for 2024

As the world continues to grapple with the semiconductor shortage, NVIDIA is reportedly poised to triple the production of its highly-sought-after H100 AI processor next year, aiming to deliver between 1.5 million and 2 million units in 2024 according to the UK’s Financial Times.

This marks a substantial leap from the 500,000 units earmarked for production this year. Many AI processors are already sold out well into 2024, underscoring the insatiable appetite for Nvidia’s chips.

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The news comes as supply chain challenges continue to impact manufacturers across the industry, creating challenges not just for NVIDIA but other major market players such as Foxconn and Lenovo.

Taiwan’s semiconductor output expected to fall 12.7 % this year

The production value of Taiwan's semiconductor industry is expected to fall 12.7 % this year compared to a year earlier, the government-sponsored Industrial Technology Research Institute (ITRI) forecast earlier this month.

The projection represented a downgrade from an earlier estimate of 12.1 % made in May, which the ITRI said was due to weaker-than-expected global demand from end-users as a result of high inflation and worldwide interest rate hikes.

A report from ITRI's Industrial Economics and Knowledge Center (IEK) on Aug. 14 forecast the output of the local IC industry at NT$4.22 trillion in 2023, compared with NT$4.24 trillion estimated in May. Weakening demand, which has forced semiconductor clients to hold higher inventories and slash orders, has prompted many suppliers to cut their sales guidance for 2023.

Among suppliers who have cut their figures is Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, which lowered its 2023 sales forecast in July to a 10 % fall in U.S. dollar terms from 2022.

Intel abandons US$5.4bn acquisition of Israeli chipmaker

Intel and Israeli semiconductor contractor Tower Semiconductor announced earlier this month that their proposed $5.4 billion acquisition deal has been scrapped due to a lack of timely regulatory approvals.

Last February, Intel announced that it had reached an agreement to acquire Tower Semiconductor as part of the company’s plans to penetrate the rapidly growing semiconductor contract manufacturing market.

Intel said that it expected the deal to finalize in “about 12 months” following the announcement and by last October, Intel expressed hopes to conclude the acquisition by Q1 2023. But by March this year, Intel was warning of a potential push to the second quarter. Sources familiar with the matter noted that the final deadline was midnight, August 15th, California time, and both companies did not anticipate approval from China.

Although Intel’s CEO Pat Gelsinger had been working on securing approval from Chinese authorities for the acquisition, it wasn’t given.

Texas Instruments to invest US$1bn into expansion of two plants

U.S. microprocessor manufacturer Texas Instruments has announced that it is investing up to US$1 billion for the expansion of its Clark and Baguio City facilities in the Philippines. Presidential Communications Secretary Cheloy Velicaria-Garafil said that U.S. officials made the commitment during the US-Asean Business Council’s meeting with President Marcos in Malacañang on Wednesday.

Texas Instruments is expected to submit an application to expand these sites in the next two weeks, and they may reach the US$1 billion Corporate Recovery and Tax Incentives for Enterprises threshold.

A spokesperson said TI’s investment plans were in line with the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022, which was signed into law last year in a bid to boost the manufacturing of semiconductors in the United States.

President Marcos welcomed TI’s investment plans, commenting that these are sectors that the Philippine economy would like to be involved in. He pointed out the country has a workforce “that is accustomed to working with foreign corporations.”

Audi predicts ongoing chip shortage for the German car industry

Despite significant ongoing efforts to establish factories in Germany, a senior Audi executive has been quoted as saying that the shortages causing disruptions in Germany’s automotive sector are expected to carry on for years before being resolved.

"It takes years, after all. It's about billions of dollars are being invested," Renate Vachenauer, Head of Procurement at Volkswagen-owned Audi, was quoted as saying by Augsburger Allgemeine newspaper.

Vachenauer said that automakers could alleviate bottlenecks by streamlining the range of chips that are used. Some 8,000 distinct chips are currently used in Audi’s fleet. "We have to use many levers to stabilize the supply of semiconductors and also stock up on the broker market to some extent," she added.

TSMC agrees to build €10bn plant in Germany

TSMC has announced that it has agreed to build a €10 billion chip plant in Germany following the passage of the European Chips Act.

Germany will contribute €5 billion to the project and has issued an exemption permit so construction can begin quickly. The factory will cost €10 billion to build, with TSMC putting up €3.499 billion to form a European subsidiary to run the factory. TSMC is partnering with Bosch, Infineon, and NXP to make the plant happen, with each set to hold a 10 % equity stake in the operation.

The project will be Saxony’s largest-ever commercial investment, with government officials promising that 10,000 jobs will be created as a result of the plant and suppliers. According to TSMC, ground should be broken on the project by the middle of 2024, with production scheduled to begin in 2027 at best.

Maruti Suzuki meets profit forecast

Maruti Suzuki India reported that its first-quarter profits aligned with estimates as the easing semiconductor crisis helped boost sales. Maruti, the country’s largest carmaker, announced buying its Japanese parent’s plant in Gujarat after the board approved acquiring Suzuki Motor Gujarat Pvt. from Suzuki Motor Corp.

Its net income was 24.9 billion rupees ($303 million) for the three months ended June 30, compared with 10.1 billion rupees a year earlier. That met the average analyst estimate of 24.66 billion rupees. Revenue rose 22 % to 323.3 billion rupees, beating estimates. Total costs advanced 19 % to 301.4 billion rupees, while raw material expenses declined 14 % compared with a year ago.

Despite meeting its profit forecast, Maruti’s June production dropped slightly to 137,133 units from 144,409 as the shortage of electronic components had a minor impact.

Auto parts maker Faurecia reports revenue increase as shortage lessens

French automotive supplier Faurecia reported first-half revenue of EUR 13.62 billion, putting it slightly ahead of the FactSet consensus of EUR 13.48 billion by 1 %, up 8 % from EUR 11.77 billion on an as-reported basis a year ago as the impact of the chip shortage lessens further.

Despite the semiconductor shortage still lingering, the impact on customer production lessened as the backlog ramped up in the first half of 2023. Faurecia’s outperformance versus production was across the board in all operating segments and regions.

The auto parts vendor only discloses revenue in the first and third quarters, while financial statements are published for half and full-year results.

Qualcomm records worst day on the market since the pandemic

Semiconductor giant Qualcomm recorded its worst day on the markets since the pandemic in early August as the ongoing chip glut produced lackluster results.

Qualcomm shares fell 8.2 % to close at $118.70 on Thursday, for their worst one-day performance since Feb. 4, 2021, when the stock finished down 8.8 % after the company said pandemic supply constraints were impacting results.

Late Wednesday, the company forecasted a lighter-than-expected quarter, as it continued drawing down inventory because of weak smartphone demand, saying revenue growth was tied to demand recovery. Qualcomm stock came under pressure in May after the company said it planned to draw down inventory for the next few quarters.

“Overall, while the recovery may be slower to get its legs off the ground given continued softness in handsets, inventories, and the macro, we still believe CEO [Cristiano] Amon is proving Qualcomm can move beyond a modem and cellular IP company to become a true broad-based semiconductor player,” said Susquehanna Financial analyst Christopher Rolland.

U.S. Chipmakers warn of worker shortage

The Semiconductor Industry Association (SIA) has warned that there won't be enough engineers, computer scientists, and technicians in the United States to support a rapid expansion this decade, threatening efforts to boost the domestic chip economy.

The warning comes after the SIA commissioned a survey which found that U.S. chipmakers are on course to create around 115,000 jobs by 2030 but that only 58 % of these will be filled based on degree completion rates.

“We're supposed to go from a $550 billion industry to a trillion-dollar industry in 2030, and that's going to take more talent," said John Neuffer, chief executive officer of the SIA. "If we aren't able to get our arms around this, our industry, in general, will falter."

The warning also comes just a few weeks after Taiwan Semiconductor Manufacturing Co. (TSMC) said production at a planned facility in Arizona will be postponed from late 2024 until 2025 because of a shortage of skilled workers.

Arm initiative seeks to establish ‘school’ for semiconductors

Chip designer Arm is looking to address the impending semiconductor skills shortage through a new initiative that will find the next generation of talent and upskill the existing workforce.

Known as the Semiconductor Education Alliance (SEA), the initiative brings together companies from across the industry intent on ensuring that a lack of talent and workers doesn’t hinder growth. Gary Campbell, Arm EVP for Central Engineering, said the alliance builds on existing agreements and workstreams from Arm and the wider industry as well as creating new ones.

The idea of the SEA is to pool resources and knowledge through what has been called a “federated” and “open” model. This will give teachers, researchers, and students access to resources and to collaborate on projects, such as joint bids for research grants.

Others involved in SEA include single-board computer maker Arduino, EDA developer Cadence, STMicroelectronics, Synopsys, Semiconductor Research Corporation, Cornell University in New York, Taiwan Semiconductor Research Institute, the All-India Council for Technical Education, and the University of Southampton in the UK.

“The Semiconductor Education Alliance aims to better align the industry around common goals, shared resources, and communities of best practice to tackle the skills gap that threatens progress today,” said Campbell.

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