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CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in October

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

AMD to acquire AI start-up

AMD said on Tuesday, October 10, that it plans to acquire an artificial intelligence (AI) start-up known as Nod.ai as part of wider efforts to bolster its software capabilities.

This has been seen by many as a means to catch up with rival chipmaker Nvidia and AMD, who plan to invest heavily in the software needed to build advanced AI chips. Across more than a decade, Nvidia has forged a powerful advantage in the AI chip market through its software and developer ecosystem.

"We are executing to that strategy," AMD president Victor Peng said in an interview with Reuters. "And doing it through internal investment as well as external acquisitions." AMD did not disclose the terms of the deal. The Santa Clara, California-based Nod.ai has raised roughly $36.5 million, according to PitchBook data.

Average new car price in Canada hits all-time high

The average price of new-car listings in Canada rose to an all-time high of CA$67,817 in September, a gain of almost 20 percent over the last year, according to data compiled by AutoTrader.ca.

AutoTrader’s third-quarter price index revealed that while new car inventories are at their highest since mid-2021, pent-up demand is still catching up with supply after the pandemic disrupted global supply chains and led to the (still) ongoing semiconductor shortage. According to the report, 1.3 million fewer cars were sold between 2020 and 2022 than in previous two-year periods.

“With sustained high interest rates, once the majority of Canadians are in cycle to renew their mortgages en masse from pre-pandemic interest rates … That’s when vehicle pricing will falter,” said Robert Karwel, senior manager at J.D. Power Canada.

Hyundai Motor, Kia, and Infineon sign supply agreement for power semiconductors

Infineon Technologies, Hyundai Motor Company, and Kia Corporation have signed a multi-year supply agreement for silicon carbide (SiC) and silicon power semiconductors.

According to the agreement, Infineon will build and reserve manufacturing capacity to supply SiC as well as Si power modules and chips to Hyundai and Kia until 2030, who will in turn support Infineon’s capacity build-up with financial contributions.

“Infineon stands as a valued strategic partner, boasting steadfast production capabilities and distinct technological prowess within the power semiconductor market,” said Heung Soo Kim, Executive Vice President, and Head of Global Strategy Office (GSO) at Hyundai Motor Group.

“This partnership not only empowers Hyundai Motor and Kia to stabilize its semiconductor supply but also positions us to solidify our leadership in the global EV market, underpinned by our competitive product lineups.”

Indian conglomerate considers acquiring Tower Semiconductor

Indian conglomerate Reliance Industries is looking to acquire Israeli company Tower Semiconductor according to recent reports in the publication Business Today. This deal would further Reliance’s entry into the semiconductor industry and help to futureproof the company’s electronics and telecom business. The plans, however, are likely to be delayed due to the ongoing conflict between Israel and the Palestinian militant group Hamas.

Last year, Reliance was reportedly looking at investing in semiconductor wafer fabrication applicant International Semiconductor Consortium (ISMC), a joint venture between Next Orbit Ventures and Tower Semiconductor. A deal never materialized. Recently, Intel scrapped its US$5.4 billion deal to acquire Tower Semiconductor following a failure to secure regulatory approval in a timely manner, opening the door for Reliance.

Tower Semiconductor produces analog integrated circuits for more than 300 clients globally, including those in the consumer, automotive, medical, industrial, aerospace, and defense industries.

Indian government receives proposal to set up semiconductor research center

The Indian government is reportedly planning to establish the Indian Semiconductor Research Centre (ISRC) which will work towards the research and development of advanced next-generation semiconductors, packaging systems, processes, technologies, and materials.

A proposal report on the roadmap to set up ISRC was handed over on Friday, October 20 by the India semiconductor R&D committee to the union Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar.

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“This institution will be a core institution in India’s growing capabilities in semiconductors. It will be the Indian equivalent of IMEC, NanoTech, ITRI, and the MIT Micro-electronic labs which have been the pioneers of every cutting-edge technology in the world,” Chandrasekhar told reporters at the unveiling of the report.

The committee of representatives constituted to create a roadmap for the ISRC includes former Intel foundry chief Randhir Thakur, vice-president of Micron Technology Hem Takiar, and general manager of IBM Semiconductors, Mukesh Khare.

Intel set to top Q3 estimates

Intel Corporation is scheduled to report its third-quarter earnings in the upcoming days after the market closes on Thursday. Although the company is widely expected to report that its top and bottom lines have fallen year-over-year, an expectations beat is likely.

The general consensus for the period ended September 30 is earnings of $0.21 per share on revenue of $12.82 billion, compared to $0.25 per share on revenue of $15.34 billion a year earlier. However, Intel has beaten earnings expectations in three of the previous four quarters.

On September 1, Intel CEO Pat Gelsinger said that the company was tracking above the midpoint of its third-quarter revenue guidance of US$12.9 billion to US$1

New Florida institute aims to become global leader in microchip production

The University of Florida has recently announced the establishment of the Florida Semiconductor Institute (FSI), a campus and state-wide network to establish critical infrastructure and make it a global leader in microchip manufacturing.

According to the FSI, the project aims to lead, advise, and coordinate with Florida on matters related to semiconductors, their design, manufacturing, and implementation. The institute hopes to make Florida attractive to investors and create more than 10,000 new jobs in the sector.

The FSI will leverage the University of Florida’s engineering department and faculty to train a new workforce of professionals leading the world in microchip production as the state grows its existing infrastructure.

The FSI was officially opened at the start of the 2023 fall semester to combat the ongoing microchip shortage.

Nvidia and AMD looking to enter the CPU market by 2025

Nvidia and AMD, two major players in the semiconductor industry, are said to be making strategic moves to enter the CPU market with Arm-based chips by 2025. According to third-quarter data from IDC, Apple’s market share has almost doubled, inspiring Nvidia and AMD’s decision to expand their own product portfolios.

Microsoft is said to be backing this move, with Nvidia and Microsoft previously collaborating on the Surface RP project. AMD's entry into the Arm chip market is particularly interesting as it introduces fresh dynamics into the industry. This comes despite AMD's ongoing performance-per-watt competition with x86.

In addition to Nvidia and AMD, Qualcomm, another major player in the industry, plans to reveal a flagship chip designed by ex-Apple engineers at an upcoming Microsoft event.

ON Semiconductor completes new manufacturing facility in South Korea

U.S. chipmaker ON Semiconductor said on Tuesday, October 24, that it had completed a new facility for manufacturing power semiconductor materials in Bucheon, west of Seoul, South Korea.

The new facility, S5 Line, is a fabrication plant that produces silicon carbide (SiC) wafers, essential components for controlling power conversion in electric vehicles and high-powered EV chargers. When fully operational, the facility will have a capacity of more than 1 million 200mm SiC wafers per year, claims ON Semiconductor.

The S5 Line is part of the ON Semi’s 1.4 trillion won (US$1.04 billion) project to expand its power semiconductor manufacturing facilities in Bucheon. The company believes that its new facility will create up to 1,000 new jobs over the next

Samsung continues production cuts to narrow down chip losses

Samsung is set to continue with its production cuts to narrow chip losses in Q3 2023, it has been confirmed in a recent report. The world’s largest chipmaker began slashing its chip production earlier this year alongside peers including SK Hynix and Micron Technology in a bid to overcome supply shortages.

Samsung’s Device Solutions (DS) division reported an operating loss of KRW 4.6 trillion (US$3.4 billion) in Q1 2023, which was the company’s first financial loss in 14 years. The primary reason for this was its significant chip inventories amid lower global demand. According to analysts, the SD division will record further losses of roughly KRW 4 trillion (US$2.96 billion) in Q3.

According to Trendforce, Samsung took an important step to cut down 50% of production for NAND Flash to deal with stagnant demand. This, they say, is likely to set off a ripple effect, a potential price uplift for their primary

Samsung unveils plans to lead automotive sector

Samsung, the world’s largest memory chipmaker, has announced new plans for a global foundry business that will have a particular focus on automotive chips. The plans were announced at the Samsung Foundry Forum in Germany on October 19.

“We seek to take the lead in the field of autonomous driving and electric vehicles through technological innovations that meet global customer demands in a timely manner,” said Choi Si-young, president and head of foundry business at Samsung Electronics.

Samsung outlined detailed plans to achieve this goal by diversifying its semiconductor technology portfolio, ranging from artificial intelligence semiconductors, and power semiconductor devices, to microcontroller units as well as wider adoption of its 2-nanometer manufacturing technology.

TSMC’s Arizona plant launch delayed until 2025

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, has announced a delay in the launch of operations at its Arizona chip factory until the first half of 2025.

TSMC revealed this during its third-quarter earnings call, citing a lack of specialist workers, an issue that has intensified in the semiconductor industry due to immigration challenges. This is despite TSMC's impressive gross profit margins as of late.

The company's CEO, C.C. Wei, highlighted the progress made on fab infrastructure and the resolution of equipment installation issues. He also noted the "early preparation" for operations and improvement in the first fab's situation. The two fabs are currently under construction in north Phoenix and have received a significant amount of government funding and backing.

U.S. tightens sanctions against China

The Biden administration has ramped up pressure on China with the announcement that it is tightening export controls on advanced AI semiconductors.

The U.S. Commerce Department announced on Tuesday, October 17, tougher export controls that “strengthens restrictions on advanced computing semiconductors, semiconductor manufacturing equipment, and supercomputing items to countries of concern.”

This move comes almost one year after the U.S. announced its sweeping export controls for semiconductor manufacturing equipment and chips to China in a bid to counter Beijing’s use of these chips in military applications.

The tighter sanctions ultimately seek to limit access to more chip-making tools in line with Dutch and Japanese rules, and to close some loopholes in export restrictions on artificial intelligence (AI) chips.

UK government silicon incubator accepts its first start-ups

12 British semiconductor start-ups have been named as the first members of a two-year pilot program backed by the UK Government intended to provide early-stage IC design companies with technical and commercial help towards bringing their products to market.

The £1.3 million ChipStart UK program is being led by Silicon Catalyst UK and is part of the UK National Semiconductor Strategy. “This is one of the most exciting times to start and grow a semiconductor company from the UK,” said SiliconCatalyst CEO Sean Redmond.

“The first group of start-ups to enter ChipStart have been selected from 27 applications following two rounds of panel interviews made up of semiconductor start-up experts from the UK and Silicon Valley. Over the next nine months, we will shape and mold these into the next generation of semiconductor leaders.”

US allows Samsung and SK Hynix to bring tools to China

The United States gave permission for South Korea's SK Hynix and Samsung to keep receiving certain U.S. chipmaking tools at their Chinese plants, the Commerce Department said in a statement on Friday, October 13.

This allows the two companies to continue their Chinese chipmaking operations without having to apply for U.S. licenses for new equipment, following new rules issued last October that prevent Chinese chipmakers’ access to critical tools. The October 2022 rules restricted shipments of advanced chips and chipmaking equipment to China as part of a U.S. bid to slow China's technological and military advances.

The U.S. then had to give some foreign chipmakers special authorizations to avoid the unintended consequences of those rules hitting their production. This recent move formalizes and extends those authorizations.

Samsung Electronics makes about 40 percent of its NAND flash chips at its plant in Xian, China, while SK Hynix makes about 40 percent of its DRAM chips in Wuxi and 20 percent of its NAND flash chips in Dalian.

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