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CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in September

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. -

Asia makes significant cuts to automotive production in early September

Microchip shortages continued to plague automakers in China and Asian markets at the beginning of September. Automakers in these regions made the majority of production cuts to schedules. This is according to the latest estimate from AutoForecast Solutions.

Asian factories outside of China eliminated 43,157 vehicles from their production plans due to shortages, while factories in China cut 19,669. Globally, carmakers lost 67,541 vehicles because of inadequate supplies of chips, even as the semiconductor and automotive industries work to fix the problem.

Meanwhile, North American assembly plants cut just over 4,700 vehicles out of their schedules. This is a relatively modest number compared with the cuts that were being contended with earlier this year.

China to build AI chip factory to bypass sanctions

China is reportedly looking to build an AI chip factory to help bypass U.S. sanctions that are affecting domestic industry, according to a recent report by the South China Morning Post.

According to the report, China is allegedly considering the use of particle accelerators which will help create new ways to produce a novel laser source. The SCMP reported that the electron beam of the accelerator will be transformed into a “high-quality” light source needed to manufacture AI semiconductor chips on-site. The particle accelerators would replace the role of the lithography machine in the steps to produce semiconductor chips for creating high-level AI systems.

At the moment, the Netherlands-based Advanced Semiconductor Materials Lithography is the only company that owns the technology for such machines. The U.S. has barred the company from selling its top-end machines to the Chinese market, similar to its barring of Nvidia, the world’s leading manufacturer of AI chips, from selling its most powerful products to China.

Engineer shortage in Vietnam puts U.S. plans at risk

A shortage of engineers in Vietnam has presented itself as a major challenge for the growth of its semiconductor industry and plans by the U.S. to fast-track the Southeast Asian country as a chips hub to counter the threat posed by China.

"The number of available hardware engineers is way below what is needed to support multi-billion-dollar investments," about one-tenth of expected demand over the next 10 years, said Vu Tu Thanh, head of the Vietnam office of the US-ASEAN Business Council.

Vietnam, a country of more than 100 million, has only 5,000 to 6,000 trained hardware engineers for the chip sector against demand of around 20,000 in five years, rising to 50,000 in a decade.

There's also a risk of inadequate supply of trained chips software engineers, said Hung Nguyen, senior program manager on supply chains at RMIT University Vietnam.

Micron begins construction on $2.7 billion India semiconductor plant

Ashwini Vaishnaw, Union IT Minister, said on Saturday, September 23, that India had embarked on its journey to become a “semiconductor hub” as US-based Micron Technology broke ground on its new US$2.75 billion chip assembly and test facility in Sanand. Micron has committed to investing up to $825 million in building the semiconductor assembly and test facility in India, with support from the government.

According to officials, the combined investment of US$2.75 billion is estimated to create around 5,000 direct jobs and offer 15,000 community job opportunities over the next five years.

“We have made tremendous strides in the last 9-10 years. It is certainly a very important milestone and I have absolutely no doubt that Micron’s state-of-the-art plant will be a beacon to all investors, other manufacturers, and participants in the global semiconductor ecosystem,” said Rajeev Chandrasekhar, Union Minister of State for Electronics and IT.

North America cuts more than 56,000 vehicles from production schedules

Automakers cut more than 63,400 vehicles from production schedules in the first three weeks of September due to the ongoing semiconductor shortage. This is according to the latest estimate by AutoForecast Solutions.

The majority of these cuts occurred in North America, where automakers slashed 56,642 vehicles from plans at their assembly plants since the forecasting firm’s previous estimate dated September 1, 2023.

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Companies trimmed production plans by 4,381 units at their European factories in that time, with the remainder of the cuts occurring in small numbers at plants in Asia, South America, the Middle East, and Africa.

While the microchip shortage is still ongoing, production issues related to it have become “somewhat muted,” said Sam Fiorani, AutoForecast Solutions’ vice president of global vehicle forecasting. Still, automakers and suppliers that do not stay on top of the issue could see problems stemming from the shortage going into 2024, he said in an email.

Wales joins the European Semiconductor Regional Alliance

The United Kingdom constituent country Wales has joined the European Semiconductor Regional Alliance (ESRA), a regional alliance that focuses on promoting growth, fostering collaboration, and developing strong value chains in the semiconductor industry.

The Welsh Government’s Representative on Europe, on behalf of Minister for the Economy Vaughan Gething, has signed a declaration to join the European Semiconductor Regional Alliance (ESRA), becoming one of the 19 founding regions of the alliance.

The ESRA will act as a regional platform as well as a partner to the European Union to promote the competitiveness of the industry on a global scale. ESRA’s activities will focus on:

  • research and innovation, developing new technologies and applications
  • skills and talent, promoting education and training programs
  • cluster development, promoting regional clusters and cross-regional partnerships

“The Welsh Government is ambitious for the semiconductor sector in the south-east of Wales and the objectives of the ESRA align with our Programme for Government and our Innovation Strategy, published earlier this year,” said Wales’ Economy Minister Vaughan Gething.

TSMC’s 2nm chip production potentially delayed until 2026

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, may have to postpone its planned production of 2nm chips from 2025 to 2026, according to a report published on Monday, September 25 in Taiwan.

The delay is reportedly due to a slowdown in the construction of a new facility in Hsinchu Baosha, a facility that will be essential to 2nm production. This construction delay is, in turn, being attributed to an overall deceleration in global semiconductor demand.

TSMC’s transition to 2nm is significant for the company as it will introduce the Gate-all-around transistor, replacing current FinFET transistors. Gate-all-around transistors utilize vertically stacked nanosheets allowing the gate to touch the channel on all four sides, reducing current leakage and energy consumption while enhancing drive current.

South Korean chipmakers target undergraduates to counter talent shortage

Chipmakers worldwide are fiercely competing to develop more advanced chips faster than their rivals. Achieving this, however, requires talent—something which many chipmakers are struggling to source.

South Korea, which is home to the world’s two largest memory chipmakers, is no exception. Here Samsung and SK Hynix are struggling to meet staffing needs for their billion-dollar facilities.

Following years of job fairs and offering hefty incentives, Korean chipmakers, together with the government, are now pushing further by setting up new specialized departments at elite schools whose graduates are guaranteed to secure jobs.

According to estimates by the Korea Semiconductor Industry Association, there were 179,000 workers in the chip industry as of 2022. The association predicts that in order for the nation to secure a competitive edge, it needs to almost double the workforce by adding some 125,000 more jobs by 2030.

In line with the projection, the government has also set the goal of nurturing 150,000 qualified workers by 2032, with a total of 12 universities across the nation being designated as schools specialized in semiconductor engineering.

TSMC says shortage of Nvidia’s AI GPU to continue for 1.5 year

The chairman of Taiwan Semiconductor Manufacturing Co. (TSMC) has said that the the ongoing short supply of compute GPUs for artificial intelligence (AI) and high-performance computing (HPC) applications is caused by constraints of its chip-on-wafer-on-substrate (CoWoS) packaging capacity, and that the shortage is expected to continue for around 18 months.

"It is not the shortage of AI chips, it is the shortage of our CoWoS capacity," said Mark Liu, the chairman of TSMC, in a conversation with Nikkei at Semicon Taiwan. "Currently, we cannot fulfil 100 % of our customers' needs, but we try to support about 80 %. We think this is a temporary phenomenon. After our expansion of [advanced chip packaging capacity], it should be alleviated in one and a half years."

TSMC is the producer of the majority of AI processors, including those made by Nvidia such as the A100 and H100 that power AI tools like ChatGPT. Liu said that demand for CoWoS surged unexpectedly earlier this year, tripling year-over-year, leading to the current supply constraints. At present, the company is installing additional tools for CoWoS at its existing advanced packaging facilities, but this takes time.

Samsung to invest $1 million in Texas A&M University

Samsung Electronics Co. said on Tuesday, September 12, that it intends to invest US$1 million in Texas A&M University’s education and recruiting programs, which are designed to nurture talent within the semiconductor sector. The South Korean chip giant’s project will offer scholarships to undergraduates and fellowships reserved for graduate students, as well as other academic support programs.

The news comes as several semiconductor makers, including Samsung along with the likes of SK Hynix and Taiwan Semiconductor Manufacturing Co., battle global talent shortages that threaten to frustrate ongoing efforts to grow chip production capacity around the world. TSMC, the world’s largest chipmaker, has already faced significant delays to the construction of its Arizona facility—one of the largest-ever foreign investments made in the United States.

TSMC says its US plant is making ‘fast progress’

Taiwan chip giant TSMC’s planned factory in the United States is making “fast progress”. This is according to the company’s chairman in a statement made in early September despite the project facing a delayed start due to worker shortages and reported union disputes.

TSMC, which controls more than half of the world’s output of microchips, is piloting significant initiatives across the world that seek to establish new chipmaking factories in countries like the U.S. and Germany.

However, the company’s Arizona plant, one of the largest foreign investments in the United States, has been delayed until 2025, which TSMC attributed to a shortage of skilled workers, with technicians to be flown in to train the US foundry’s staff.

“We don’t need to fuss—in a new place and at infrastructure built early, it won’t be running as smoothly as in Taiwan,” said chairman Mark Liu during SemiCon Taiwan, a three-day gathering of the semiconductor industry in Taipei. “But the morale of our Arizona colleagues is very high and they have made fast progress in the past few months.” He attributed it to Arizona state and city officials “unanimously supporting and helping TSMC resolve all issues including the labor issue”.

TSMC now eyes Japan as it fights Arizona skills shortage

Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, is reportedly eyeing Japan as the company’s next overseas destination while it struggles to hire skilled workers for its multi-billion-dollar Arizona site. This is according to anonymous sources with knowledge of the company as reported by Reuters on September 13.

In July this year, the chip maker announced that it would postpone a $40 billion expansion to the site during its quarterly earnings call which saw profits fall for the first time in four years. The company is already developing a $8.6 billion factory on the Japanese island of Kyushu and is anticipated to begin selling chips in 2024, the anonymous sources also revealed to Reuters.

Although skills shortages are not unique to the U.S. and are very much a global problem, the number of students in tertiary education in Japan has remained at 4 million since 2000 to 2023 according to research analyst GlobalData. In addition, Japan’s government has promised to donate US$ 20 million towards promoting science and engineering within its universities.

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