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CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in June

From Luke James Reading Time: 9 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. - stock.adobe.com)
Skip to chip shortage news in July 2023

AI chip giant NVIDIA 'extremely likely' to invest in Europe

Nvidia CEO Jensen Huang said on Friday, June 23rd that his company, the world's most valuable chipmaker, is "extremely likely" to invest in Europe as it is a “wonderful idea.” By investing in Europe, Nvidia would be joining other semiconductor giants like Intel and TSMC which are also looking to establish new operations in the region with the help of government subsidies. "I would say it is extremely likely and the reason for that is because Nvidia would like to be a global international company and who could imagine a better place to invest in," Jensen said.

Nvidia, which specializes in AI chips, has experienced significant growth in recent years, with its value now hovering at around US$1 trillion. Huang made these remarks after a meeting with the EU's top tech official Thierry Breton at Nvidia's headquarters in Silicon Valley.

Auto industry is ‘adapting’ following chip shortages

“Is the semiconductor chip shortage ending?” was among the many questions asked of Susan Golicic, professor of supply chain management at Colorado State University, when she addressed the FreightWaves’ Future of Supply Chain event on June 20th.

Golicic, who worked for Chrysler, one of the Big Three automotive manufacturers in the 1990s, said the industry has “caught up quite a bit” after experiencing turbulent years in 2021 and 2022 with extended waits for vehicles.

“The auto companies were focusing on their more profitable vehicles and not building as many … less profitable vehicles because of the parts shortages, especially in chips,” Golicic said. To avoid another shortage, Golicic said that the automotive industry has been working hard to develop additional chip suppliers and build new plants.

Easing chip shortage boosts output in Thailand

Thailand’s car manufacturing increased by 16.4 % year-on-year in May to 150,532 cars according to the Federation of Thai Industries (FTI), which points to the easing of the global semiconductor shortage as the reason.

From January to May, domestic car production rose by 6.7 % year-on-year to 775,955 units. Manufacturing for both domestic sales and export increased during the first five months of this year, said Surapong Paisitpatanapong, vice-chairman of the FTI.

Manufacturing for export rose by 27 % year-on-year to 445,746 units while domestic market manufacturing increased by 1.3 % year-on-year to 330,209 units.

The upward trend caused the FTI to maintain its car production target for 2023 at 1.95 million cars, with 1.05 million units to be produced for export. Thailand's automotive industry was previously affected by both a semiconductor shortage and the impact of lockdown measures in China.

Intel chooses Israel for a $25bn microchip factory

Intel will spend US$25 billion on building a new chip factory in Israel, the company has announced, marking the latest in a string of recent investments that have shone a light on the relatively limited microchip ambitions of other countries.

The US semiconductor giant said it had “submitted a business plan to upgrade its manufacturing facilities in Israel”, where it has operated since 1974, but declined to confirm “specific details of the project”.

Binyamin Netanyahu, the Israeli prime minister, confirmed the deal yesterday and described it as the largest-ever international investment in the country. “[It is] a tremendous achievement for the Israeli economy: 90 billion shekels [$25 billion],” he said.

Intel announced the first, $10bn phase of the expansion plan two years ago, making the extra $15bn commitment the latest in a string of giant projects designed to boost Intel’s manufacturing footprint after a period of under-investment and make it more competitive.

Intel to build €4.6bn chip factory in Poland

Intel has announced plans to build a 4.6bn semiconductor assembly and testing facility in Poland. Based in Wroclaw, western Poland, the site will employ 2,000 people. While Intel’s factories in Germany and Ireland will produce wafers, which serve as the base component of microchips, the Polish plant will cut these wafers into individual chips and assemble and test them before sending them to customers.

Intel has not disclosed how much financial support the Polish government is contributing to the project. However, it did say in a press briefing that, “like in all locations where it operates, Intel will pursue appropriate incentives… to ensure its operations are globally competitive”.

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Design and planning of the Wroclaw facility is expected to begin imminently, with construction to commence following approval from European authorities. Completion is expected in 2027.

Micron to set up US$2.75bn semiconductor facility in India

Micron Technology has announced new plans to build a US$2.75 billion semiconductor assembly and testing facility in Gujarat, India. The proposed facility will focus on the assembly and testing of both DRAM and NAND products to cater to domestic and international demand.

Micron says that the unit will be constructed in two phases, with phase 1, which will include 500,000ft of cleanroom space, expected to be operational by late 2024. The second phase of the project will begin in the second half of the decade and will involve building another facility equivalent to the size of the phase 1 facility.

Over the course of the project, Micron will invest up to $825m, which is expected to create up to 5,000 new direct jobs. India’s federal government will provide 50 % of the financial support needed to complete the project, with the state of Gujarat providing incentives worth 20 % of the overall cost for a total project value of up to US$2.75 billion.

Micron president and CEO Sanjay Mehrotra said: “Our new assembly and test location in India will enable Micron to expand our global manufacturing base and better serve our customers in India and around the world.”

Outlook improves with the latest numbers on the microchip shortage

Although the ongoing global supply of microchips continues to be a problem for automotive firms, the outlook has improved a tad with the latest figures from AutoForecast Solutions, which has been tracking lost vehicle production weekly since 2021 and recently lowered its estimate for total 2023 factory cuts from 2.8 million to 2.6 million.

Despite this, automakers continue to experience production delays as a result of chip shortages. Chinese assembly plants cut nearly 8,300 vehicles from their schedules for the week commencing June 12th, while North American factories will eliminate nearly 7,400 vehicles, AutoForecast Solutions estimates. Worldwide, assembly plants cut approximately 22,000 cars and trucks from factory plans for the same week, the firm said.

Stellantis and Foxconn announce new joint venture

Stellantis and Foxconn have announced a strategic partnership that will see the creation of SiliconAuto, a 50/50 joint venture that will be dedicated to designing and selling state-of-the-art semiconductors to supply the automotive industry with chips. The joint venture will combine Foxconn’s development capabilities and domain expertise with Stellantis’ deep understanding of global mobility needs. SiliconAuto will provide customers an auto industry-centric source of semiconductors for the growing number of computer-controlled features and modules, particularly those needed for electric vehicles.

“Stellantis will benefit from a robust supply of essential components, which is critical to fueling the rapid, software-defined transformation of our products,” said Stellantis Chief Technology Officer Ned Curic.

“Our goal is to build vehicles that seamlessly connect with our customers’ daily lives and deliver class-leading capabilities years after they leave the assembly line. With this joint venture, we can create purpose-built innovations with an efficient partnership.”

Automakers continue to make cuts worldwide

Assembly plants in each automotive region of the world cut vehicles from their production schedules in the week commencing June 5th, according to AutoForecast Solutions. Plants in China were impacted the most, with 14,013 vehicles cut from production schedules due to the ongoing semiconductor shortage.

North America has recorded the worst year-to-date figures, with 607,548 cuts so far and a projection of 1,094,173. This is followed by Europe with 352,564 cuts this year to date and an estimation of 730,747.

The total number of vehicles expected to be cut globally by the end of 2023 has remained steady at around 2.82 million, a potential sign that the semiconductor situation is slowly improving—even if, as AutoForecast Solutions’ vice president of global vehicle forecasting put it, “sometimes painfully so.”

Lockheed Martin partners with GlobalFoundries to solve chip problems

Lockheed Martin, a global leader in security and aerospace, has partnered with chipmaker GlobalFoundries for the procurement of a domestic semiconductor supply for defense systems. Global chip shortages, which dent production levels, have led to supply chain disruptions, thereby pushing defense companies to undertake such steps.

GlobalFoundries has manufacturing facilities in New York and Vermont, meaning it has government authorization to produce secure chips used in sensitive applications. “This isn’t just about Lockheed purchasing chips from Global. It’s about two of the biggest companies in New York working together to spur innovation,” U.S. Senate Majority Leader Chuck Schumer said recently.

According to the two companies, the strategic collaboration plans to undertake manufacturing across a range of advanced and next-generation chips. This will enable Lockheed Martin to take advantage of GlobalFoundries’ technology for increasing anti-fragility in microelectronics systems and supply chains.

Both companies will also seek external funding opportunities, technology development, and U.S. government collaboration.

Yet more production cuts in Asia and Europe as June began

The month of June kicked off with automakers cutting around 41,700 more vehicles from their production plans because of ongoing microchip shortages, according to estimates by Auto Forecast Solutions.

Most of the cuts, which were recorded in the week beginning May 29th, were at assembly plants in Europe and China, with Europe cutting around 16,400 vehicles from production schedules, while around 15,500 were axed in China. Roughly 8,000 were cut at plants in the rest of Asia, while automakers in the Middle East and Africa cut 1,700 vehicles.

In slightly more positive news, this marked the second consecutive week where no further microchip-related production cuts were made at factories in North America. Plants in South America were also affected by semiconductor supply issues.

Opel CEO says it has overcome the chip shortage

The chief executive of Stellantis' German subsidiary Opel says the brand has overcome a shortage of semiconductors that has burdened the car industry in recent years, news outlet Business Insider reported on Friday, June 2nd.

Opel CEO Florian Huettl told the outlet that the company was struggling with a rampant skilled labour shortage, however. To overcome this challenge, the company is actively looking for IT experts to work on “further electrification and the next steps in autonomous driving.”

Opel has been a subsidiary of Stellantis since 16 January 2021. It was owned by the American automaker General Motors from 1929 until 2017 and the PSA Group, a predecessor of Stellantis, from 2017 until 2021.

TSMC-led Japan chip hub faces land shortage

Taiwanese Semiconductor Manufacturing Co. earlier this year announced plans for a second chip manufacturing plant in southwestern Japan.

The world's largest chipmaker is building its first Japanese plant in the farming town of Kikuyo, Kumamoto prefecture, news which has attracted other projects to the area, such as a massive Sony image sensor factory.

However, the project faces a huge challenge: a lack of land. Senior officials from the Taiwan Electronic Equipment Industry Association identified this problem during a visit in April; urbanization control areas cover about 85 % of the town, restricting companies from setting up shop near the TSMC plant.

A survey late last year by Kumamoto Bank found that most companies that had considered expanding into Kikuyo had given up due to these strict regulations. Local governments are now rushing to secure land.

Japanese train operators limit sales of transport cards due to chip shortage

Eastern Japan Railway Co. has said that it will suspend sales of some Suica and Pasmo rechargeable transportation cards starting on June 8 due to a shortage of the chips needed to make them, in yet another example of how the chip shortage is impacting every industry — not just automotive manufacturing.

It and other railway operators said in a joint statement that they will limit sales of the IC cards “for the time being” since the card manufacturer is finding it difficult to secure chips due to a global shortage of semiconductors.

According to railway operators, the suspension will only cover unregistered cards. Users can still buy registered versions, and holders who have lost their current cards or cannot use them due to a malfunction will be able to purchase new ones.

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