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CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in March

From Luke James Reading Time: 10 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 November 2023

Infineon moves payment card chips to 28nm

Infineon Technologies has moved its Secora payment card chips into 28nm process technology to boost availability amid the ongoing chip shortage, the chipmaker recently announced.
Payment cards have suffered from capacity issues during the pandemic when using older 40nm and 65nm process technologies. “[This] offers the latest technology as a reliable sourcing option to all regional payment ecosystems,” said Infineon. “It [aims] to relieve the pain that the payment industry has been experiencing due to the semiconductor shortages in mature technology nodes,” said a spokesperson for Infineon.

Moving the Secora line to 28nm with embedded non-volatile memory will also provide more innovative product designs, the company claims.

Taiwan prepares for drought in key chip hubs

Taiwan is once again preparing for water shortages, less than two years after overcoming its worst drought for a century, and this is bad news for the country’s chipmakers. Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chip maker, uses 99,000 tonnes of water per day at its facilities in the Southern Taiwan Science Park.

Kaohsiung, an emerging chip hub, and Tainan, where TSMC and United Microelectronics Corp. (UMC) both have chipmaking facilities, recently introduced water-saving measures, including reducing the pressure in public water supplies at night. The Southern Taiwan Science Park has asked suppliers to cut their water use by 10 % and Kaohsiung will follow suit at its industrial zone from March 30. By restricting water usage, officials hope to avoid a repeat of 2021, when a severe drought disrupted manufacturing activities across the island and forced chipmakers to rent water tanks and drill new wells in order to keep running.

"TSMC has contingency plans for different water restriction stages and works with the government and private organizations to save water and develop water resources," the chipmaking giant told Nikkei Asia. It said it has put conservation measures in place at its facilities in the Southern Taiwan Science Park, which include reducing water consumption and recycling more wastewater.

The drought is expected to last until May.

proteanTecs announces collaboration with BAE Systems

Secure electronics for critical applications requires product authentication and tracking, throughout the entire lifecycle. To enable the development of new technologies, companies need to adhere to strict measures while simultaneously mitigating the risk of fraudulent products. As the chip shortage continues to hit supply, however, the fraudulent semiconductor market is gaining traction.

“The counterfeit chip market is sizeable and growing with a worldwide value estimated at $75B in 2019. Those counterfeits are believed to have been integrated into more than $169B of electronic devices,” said Paul Karazuba from Semiconductor Engineering in a recent interview. “With electronic devices critical to nearly every aspect of modern life, the risk of counterfeits can range from an inconvenience to injury or loss of life.”

In response to this threat, proteanTecs has announced a new partnership with BAE Systems. “We are proud to have been selected by BAE Systems to bring reliable and authenticated electronics to high trust sectors,” said Uzi Baruch, Chief Strategy Officer at proteanTecs. “By preventing counterfeit leaks, proteanTecs’ technology can help companies assure secure deployment, protect their reputations, and maintain customer trust in their products.”

Thailand auto production up 6.39 % in February

Automobile production rose by 6.39 % in February, it has been reported by the Federation of Thai Industries (FTI). In total, 165,612 vehicles rolled off production lines as a shortage of microchips eased and exports increased.

Spokesperson for FTI’s automotive industry division Surapong Paisitpattanapong said export climbed 11.42 % in February from a year earlier, after January’s 24.28 % rise.

Domestic sales, however, dropped 3.94 % in February from a year earlier, after January’s 5.58 % fall, due to an unexpected sharp decrease in truck sales, he said. In January, production rose by 4.02 % year-on-year. The country is a regional vehicle production and export base for some of the world’s top automakers, including Toyota and Honda.

EU officials look to strengthen response to semiconductor supply crisis

At a meeting on March 17, EU officials discussed mechanisms for monitoring and responding to the semiconductor supply crisis in the upcoming Chips Act. The legislation is currently at the last phase of the legislative process, where the European Parliament, Council and Commission meet to reach a final agreement.

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EU lawmakers have introduced the principle that crisis management should be based on a long-term strategic mapping that the European Commission must conduct in consultation with national authorities and business representatives. In doing so, the idea is that it would identify early warning indicators that would trigger the crisis stage.

When conditions for this crisis stage are met, the Commission should request EU governments to activate the crisis stage by a qualified majority. The European Semiconductor Board would then assess the expected impact of the possible imposition of protection measures and advise on further effective measures. Before entities from critical sectors can benefit from any emergency measures, they should prove that they have done everything possible to prevent risks.

Toyota’s January sales illustrate ongoing chip shortage struggles

Toyota has reported that its sales dropped by 5.6 % year-over-year in January, to around 710,000 units. The automaker acknowledged that January presented the second consecutive month of year-over-year decrease for the Toyota brand in terms of global sales. Although sales dropped, production numbers increased last month. Toyota produced 8.8 % more vehicles in January compared to the same month in 2022. Overall, around 689,000 units left the assembly lines.

A tight supply of semiconductors, as well as the impact of the ongoing global health crisis, continued to cause problems for the company. This caused production to take a hit, especially as chip inventories continue to be constrained. Despite forecasts that chip inventories could improve in 2023, constrained supply continues to be a major concern for automakers. General Motors previously warned that the chip shortage is unlikely to end in 2023. The company’s CEO said that shortages could even persist beyond this year, especially as investments in capacity wouldn’t come to fruition earlier than 2024.

Inflation is driving up fab costs for chipmakers

Samsung and Intel have both acknowledged that rising inflation is increasing operational costs at their chip fabs. When Intel first announced plans to build a new fab near Magdeburg in Germany last year, it said that its first production fab would require investments of US$18.7 billion. Now, Intel estimates that this will now cost US$31.675 billion. “Disruptions in the global economy have resulted in increased costs, from construction materials to energy," reads a recent statement by Intel.

It's not just Intel feeling the squeeze. Samsung estimates that its initial investments in its upcoming Texas-based fab will total more than US$25 billion, up more than US$8 billion from initial forecasts. "The higher construction cost is about 80 % of the cost increase," a Reuters source is reported to have said. "The materials have gotten more expensive,” they added.

India and US sign memorandum of understanding on semiconductor supply chain

India and the United States signed a memorandum of understanding on the semiconductor supply chain on Friday, March 10, in a bid to strengthen cooperation in the sector, facilitate new commercial opportunities, and promote the development of innovation ecosystems.

The memorandum seeks to establish a mechanism between the two governments on semiconductor supply chain resiliency and diversification. The U.S. Secretary of Commerce Gina Raimondo travelled to India to sign the memorandum with Indian Commerce and Industry Minister Piyush Goyal.

Secretary Raimondo said India's desire to expand its advance manufacturing of semiconductors was totally aligned with her country's desire and goal to make the American supply chain more resilient, while Minister Goyal said that the MoU would help in expanding mutual cooperation and enhancing resilient supply chains.

Microchip firm asks UK government for investment

The boss of one of the UK's biggest microchip firms is calling on the government to invest "hundreds of millions" in the sector. This comes after a joint report published in early March found that the UK’s position in the semiconductor space is threatened by “skills shortages, high costs, and low public awareness.”

“The government can't just spend a few tens of millions of pounds," Scott White, boss of Pragmatic Semiconductor, said. “It has to be hundreds of millions, or even more than £1bn, to make a substantive difference." Mr White added that while the company wanted to keep its manufacturing in its UK plant in County Durham, "that only makes sense if the economies are justified compared to elsewhere". White says that unless significant investment is provided, UK firms could go abroad. The UK government has already come under pressure from UK lawmakers who last month criticized it for delaying its semiconductor strategy, stating it “must act now to secure the future of the vital UK semiconductor industry”.

Honda suspends Civic orders in Japan

Honda has paused all orders of its Civic model by Japanese customers. “Apology for temporary suspension of orders for customers considering CIVIC,” the automaker wrote on its website in Japan, translated by Google. “In order to ensure the delivery of CIVIC to all customers who have already placed orders, we are currently suspending the acceptance of orders.”

This will affect the Civic LX with its six-speed manual transmission and the Civic e:HEV hybrid model. In January, Honda suspended orders for the high-performance Type R trim of the car, blaming similar difficulties.

Honda says that the nature of the semiconductor shortage means that the company cannot say when it will be in a position to take orders again.
“Due to the chronic supply shortage of semiconductor parts, it is difficult to forecast future production,” the automaker wrote of the Civic LX and e:HEV models. “Regarding the resumption of orders, we will inform you again based on the future production situation. We deeply apologize for causing great inconvenience to customers who are considering it.”

Ford ups production as U.S. auto sales recover

Ford will reportedly increase the production of six models this year, half of which will be electric, as the automaker rebounds from slow sales in 2022.

Ford announced in early March that it plans to build more of the Mustang Mach-E, the Bronco Sport SUV and Maverick small pickup, the F-150 Lightning electric pickup, and the Transit and E-Transit gas and electric full-size vans.

To help increase production, Ford last year said it would add a third shift and 1,100 jobs at its full-size van plant in Claycomo, Missouri and another 3,200 jobs related to building the F-150 Lightning which is made in Dearborn, Michigan. Ford will also hire new workers at plants in Cuautitlan and Hermosillo, Mexico, where the Mach-E, Maverick, and Bronci Sport are also made.

Suzuki says that chip shortage will continue this year

Maruti Suzuki India expects semiconductor shortage to continue for the next few quarters leading to a further increase in order backlog of certain models, says a senior company official.Suzuki, which is India’s largest automaker, has seen its pending bookings increase to 3.69 lakh units, with Ertiga leading with close to 94,000 bookings. Other models including the Grand Vitara and Brezza have an order backlog of roughly 37,000 and 61,500 units respectively.

The automaker has also received around 22,000 and 12,000 bookings respectively for the Jimny and Fronx models.

Maruti Suzuki has already suffered a production loss of around 46,000 in Q4 2022 due to the chip shortage, and the company expects further impacts on production in the current quarter, too.

"The semiconductor shortage still continues. Last quarter we lost 46,000 units due to this issue and this quarter also the problem continues for a few models," Maruti Suzuki India Senior Executive Officer (Marketing and Sales) Shashank Srivastava told journalists in a recent interview.

Hyundai defies chip shortage as sales rise

South Korean auto giant Hyundai recorded a rise in sales in February compared to the same month in 2022, as the chip shortage is no longer considered a major concern for the company. Hyundai shipped close to 328,000 vehicles last month, and this represents a 7.3 % increase from a year earlier.

In the domestic market, Hyundai sold a little over 65,000 vehicles, leading to shipments in South Korea improving by 23 % for Hyundai. Sales in international markets increased by 4.1 % to nearly 263,000 vehicles. The first two months of the year also show encouraging numbers. Hyundai’s 2023 sales are already up 8.5 % compared to the same period a year ago. Perhaps most significant, Hyundai no longer seems to consider the chip crunch a major challenge to producing cars. The company says the effects of the health crisis, rising interest rates, and the IRA act in the United States are currently its biggest challenges.

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