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Electronic Components

Electronic component market to see continued growth by 2027

Electronic component market to see continued growth by 2027

Electronic component market to see continued growth by 2027

The electronic component market is set to see continued growth over the next five years, with projections estimating greater demand than ever.

Several forecasts have converged with the same conclusion; demand for components is set to rocket as the world adopts more advanced technologies. 

This article will explore the latest research papers and market analysis from reputable sources. We will also explore why the demand for electronic components is set to soar and the supply chain’s challenges. 

Global components market 

The market analysis covered by Market Watch predicts that the global electronic components market will reach USD 600.31 billion by 2027, from USD 400.51 billion in 2020, a compound annual growth rate of 4.7% from 2021. 

Active components market 

Another market report, this time looking at active electronic components, predicts the active electronic components market will reach USD 519 billion by 2027 (£380bn pounds, converted 12/01/22), a CAGR of 4.82% from 2021. 

Passive and interconnecting components market 

According to 360 Research Reports, the passive and interconnecting electronic components market is projected to reach USD 35.89 billion in 2027, up from USD 28.79 billion in 2020, a compound annual growth rate of 3.2% from 2021. 

Semiconductor wafer market 

According to Research and Markets, the global semiconductor wafer market is predicted to reach USD 22.03 billion by 2027, rising at a market growth of 4.6% CAGR during the forecast period starting from 2021. 

Dynamic Random Access Memory (DRAM) market

Market Reports World predicts the global DRAM market will see extreme growth, growing at a CAGR of 9.86% between 2021 and 2027. The market was valued at USD 636.53 million in 2021 and will grow to nearly USD 700 million by 2027.  

Why is component demand set to increase so much?

The world is undergoing an extreme technological transformation that began with the first computers. Today, electronics are everywhere, and they are becoming ever more intricate and complex, requiring more and more components. 

Several technologies are converging, including semi-autonomous and electric vehicles, automation and robotics, 5G and internet upgrades, consumer electronics, and smart home appliances like EV chargers and hubs. 

This is a global transformation, from your house to the edge of the earth. Electronic components are seeing unprecedented demand because smarter, more capable devices are required to power the future. 

What challenges does the supply chain face? 

The two biggest challenges are shortages and obsolescence. 

Shortages are already impacting supply chains, with shortages of semiconductors, memory, actives, passives, and interconnecting components. 

As demand increases, supply will struggle to keep up. It will be the job of electronic components suppliers like Lantek and electronic component manufacturers to keep supply chains moving while demanding increases. 

Obsolescence refers to electronic components becoming obsolete. While some electronic components have lifespans of decades, others are replaced within a few years, which puts pressure on the supply chain from top to bottom. Email your inquiries to us today at sales@lantekcorp.com. Our specialized team is here to help.

In any case, the future is exciting, and the electronic components market will tick along as it always does. We’ll be here to keep oiling the machine. 

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component shortage Electronic Components

Causes of IC Shortage

silicon semiconductors

Causes of IC Shortage

There’s a serious shortage of integrated circuits affecting every corner of the electronics’ world. Discrete circuits, optoelectronics and sensors are also experiencing shortages, putting pressure on supply chains from top to bottom.

What are the causes of IC shortages? This article will explore the main causes, so that you can understand what’s going on.

Reshaped demand

The Coronavirus pandemic reshaped demand for semiconductors, shifting automotive demand to device demand (car plants shut down, while demand for electronic devices soared with stay at home and remote working).

Now that automotive production is ramping back up, there aren’t enough ICs to go around, causing a shortage across all industry sectors.

The pandemic also caused short-term, unplanned plant shutdowns and labor shortages, reducing the number of ICs manufactured.

Logistics

The logistics industry is still recovering from COVID-induced shutdowns and travel restrictions. While air and sea freight is running at good capacity, road transport is proving difficult across borders, creating supply constraints.

In 2020, air cargo capacity saw a 20% decline. In 2021, it’s back to normal, but you still have the problem of moving components on the ground.

In the USA, there is also a serious driver shortage underway that is affecting everything from electronic components to supermarket shelves.

Lead times

The amount of time that passes between ordering semiconductors and taking delivery has increased to record levels. In July 2021, it surpassed 20 weeks, the highest wait time since the start of the year and eight days longer than June.

Longer lead times can be caused by a variety of factors, but in this case it’s caused by factories running at capacity with no room for acceleration. Labor shortages and problems getting hold of materials are exasperating the problem.

Raw materials

A shortage of raw materials is causing big problems for semiconductor manufacturers, who can’t get the materials they need to meet demand. Shortages of raw materials and high raw material prices are combining to squeeze production.

The soaring price of raw materials is also increasing the prices of ICs, with some components seeing a yearly price increase up to 40%. These costs will eventually be passed on to the consumer who will have to stomach higher prices.

Stockpiling

Whether we’re talking about the communications, automotive or consumer electronics sector, IC stockpiling has exploded. The world’s biggest manufacturers have stockpiled huge quantities of components for themselves.

This hoarding of components by nervous manufacturers eager to secure inventory takes a significant volume of components off the open market, squeezes the supply chain, and gives the biggest players an upper hand over everyone else.   

Trade sanctions

For all their bad press, China makes a lot of chips – around a billion a day. Their biggest chipmaker, SMIC, was hit by US sanctions in late 2020, eliminating SMIC chips from the US market. You’d think this would mean more chips for the rest of the world, but China recoiled and went defensive, keeping most of the chips for themselves.

US sanctions twisted the global supply chain out of shape, creating volatility in an industry that was already in turmoil from the pandemic.

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component shortage Electronic Components

Component Prices Rise 10% to 40% – But why?

Component Prices Rise 10% to 40% - But why?

While component price increases are expected when demand surpasses supply, the scale of recent increases has come as a shock to many businesses.

In its Q3 Commodity Intelligence Quarterly, CMarket intelligence platform Supplyframe reports that some electronic components have seen prices rise by as much as 40%, making it uneconomical for products to be made.  

Specifically, semiconductors, memory and modems are seeing 10 to 40% price increases, exceeding what most analysts envisioned for 2021.

Why are prices rising?

Price rises start with materials. There are long lead times for many raw materials, causing shortages. Add rising commodity prices and difficulties transporting products and you have a disrupted manufacturing economy.

You also must factor in the impact of the coronavirus pandemic, which has caused labor shortages and disrupted the manufacturing economy with shutdowns.

Logistics is also a big fly in the ointment for electronic components. The industry is recovering from COVID-induced shutdowns and travel restrictions are causing problems at borders, creating delays that ripple through the supply chain.

Supply and demand

The bulletproof economics of supply and demand also rule the roost for electronic components, and demand is higher than it has ever been.

We are in a situation today where most electronic components manufacturers are running at 99-100% capacity and can’t keep up with demand.

Demand is outstripping supply for chips, memory and communications components like integrated circuits, discrete circuits, optoelectronics, and sensors creating a bidding war as manufacturers scramble to get what they need.

Growing demand for new technologies

Emerging technologies like artificial intelligence, machine learning, virtual reality, augmented reality, and edge computing are fuelling demand for smarter chips and data center modernization, while technologies like 5G and Wi-Fi 6 are demanding infrastructure rollout, which requires significant investment.

Across the board, technology is booming. Manufacturers are making more products for more people, and they must do so while balancing costs at a time when component prices are rising – no easy feat even for established businesses. 

Pressure relief

Everyone is raising prices in line with their own cost increases, from semiconductor manufacturers to outsourced fabs and suppliers. At 10 to 40%, these increases are putting pressure on supply chains and businesses.

How many price increases will target markets absorb? How can we sustain production without significant margin pressure? These are the challenges facing manufacturers, who are stuck between a rock and a hard place right now.

There are a few solutions:

  • Equivalents: Source equivalent components from different brands/makers/OEMs that meet size, power, specification, and design standards.
  • Use an electronic components distributor: Distributors are the best-connected players in the industry, able to source hard-to-procure and shortage components thanks to relationships with critical decision makers.

Prices will fizzle down, eventually

Although research published by Supplyframe says pricing challenges will remain through early 2023, they won’t last forever. Price rises should fizzle out towards the end of 2021 as manufacturers catch up to orders and reduce disruption.

If you are experiencing an electronic component shortage, we can help. Email us at sales@lantekcorp.com if you have any questions or call us at 973-579-8100 to talk with our team.

 

 

 

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Electronic Components Semiconductor

Why are semiconductors so important to so many industries?

Is There a Passive Component Shortage?

Why are semiconductors so important to so many industries?

The semiconductor chip has done more to connect the world than any other technology, but why is it so important to so many industries?  

Semiconductors are materials used to make semiconductor wafers. Which potentially millions of components are fabricated, to create an integrated circuit (IC), creating a single chip that can be used for computation or other tasks.

Semiconductors are important to so many industries because they are an essential electronic component. Whether we are talking about the semiconductor material (silicon, silicon carbide) or the chips that perform tasks.  

To understand why semiconductors are so important to so many industries, let’s take a step back and clarify what a semiconductor actually is.

What is a semiconductor?

A semiconductor is a material that partly conducts current, somewhere between that of an insulator and a conductor (hence the name semi-conductor).

A semiconductor chip is an integrated circuit (IC) formed on a wafer of silicon, consisting of the semiconductor material that manages the flow and control of current, and components like transistors and resistors to create the circuit.

When talking about semiconductors in relation to chips, we use the names “chips” or “semis’” because these names are more accurate for describing circuits laid down or grown to do computation or other tasks like memory.

Why are semiconductors so important?

In 1947, the first semiconductor transistor was made. Engineers quickly realized that manufacturing transistors out of silicon allowed them to fit on a microchip, which opened the gates to all the electronics you use today.

Without semiconductor chips, modern electronics would not exist. These inconspicuous, tiny components replaced tubes in electronics in the 1970s, laying the foundation for every electrical device used today, including the screen you’re looking at.

Today, all modern electrical devices use semiconductor chips, from home ovens to smartphones and cars. Billions of semiconductors are manufactured each year, and they are getting smaller and smarter with each generation.

Powering our smart, connected world

As we discussed earlier, semiconductor chips are single electronic components consisting of thousands or millions of electrical components, enabling functions like computation, memory, oscillation, switching, logic, amplification, and so on.

Without this single component with an integrated circuit, there would be no way to efficiently make the circuits we need to create smart, connected devices in their current form. Quite literally, chips are the reason you are reading this.

With an insatiable appetite for semiconductor chips, it’s a good job the material we use to make the wafers – silicon – is naturally abundant.

Today, most chips are built on silicon, which makes up 27.7% of the earth’s crust, or silicon carbide, a compound tweaked for performance.

However, our demand for chips is outstripping supply. There is a global semiconductor shortage underway affecting all industries, with the automotive industry hardest hit due to a perfect storm that has been building for years.

Electronic components distributors like Lantek are helping supply meet demand, while the semiconductor industry battles to make more chips.

If you are having difficulty finding those hard-to-find and obsolete electronic components. Get in touch with our team today by emailing sales@lantekcorp.com or call 1-973-579-8100

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Electronic Components

Chips shortage limits auto production in Brazil and the rest of the world

Chips shortage limits auto production in Brazil and the rest of the world

“Never seen anything like it,” Tesla’s Elon Musk tweeted last month about the global chips shortage, “Fear of running out is causing every company to overorder – like the toilet paper shortage, but at epic scale.”

If you want a prime example of the chips shortage, look to Brazil.

In 2020, the automotive industry in Brazil was hit hard by chip shortages and the coronavirus pandemic. Approximately 1.61 million passenger cars were made in 2020, a decrease of over 34% compared to the following year. 

2021 got off to a flier… then grounded

2021 got off to a much better start for Brazil, with 1.14 million passenger cars leaving the production line in in the first half of the year, a 57.5% increase compared to the same period last year. However, production has hit a ceiling.

Brazil’s Association of Automotive Vehicle Manufacturers, ANFAVEA, has disclosed that because of chip shortages, Brazil missed its target for automotive production in the first half of 2021, and the numbers cited are startling.

According to ANFAVEA, some 100,000 to 120,000 passenger cars were prevented from entering production by the chips shortage. In June, only 166,947 passenger cars were made, the worst figures of any month in the last 12 months.

Manufacturing limitations created by the chips shortage have been compounded by the coronavirus pandemic. Brazil has seen 19.8m coronavirus cases with a 2.8% mortality rate, sadly resulting in over 500,000 deaths.

The biggest factories are struggling in Brazil

More than 20 plants in Brazil run by the likes of Volkswagen, Mercedes-Benz, General Motors, Nissan, Toyota, Renault, Volvo, Scania and Honda have shut down temporarily in 2021 because of the chips shortage and the pandemic.

At the beginning of June, Volkswagen halted operations at two Brazilian plants amid the chips shortage for 10 days. The company said, “A significant shortage of semiconductors is resulting in several supply bottlenecks.”

Then, in July, Hyundai Motor temporarily halted the operations of its Brazil plant due to the chips shortage. The closure was the first in the Piracicaba plant’s history, raising the alarm over chip shortages in the automotive sector.

What next for the Brazilian automotive sector?

Figures show that in the first half of 2021, the Brazilian automotive sector had a strong rebound on 2020. However, water has been thrown over the fire towards the middle of the year, due to chip shortages across the sector.

Local manufacturers expect to see some relief after August as manufacturing plants catch up, but manufacturers are uncertain about when the supply chain will normalize.

How’s morale among big companies? Sombre, to say the least.  

IBM says the chip shortage could last two years, while Intel Intel’s chief executive, Pat Gelsinger, thinks it could stretch into 2023.

Dell’s CEO echoes these sentiments, “The shortage will probably continue for a few years. Even if chip factories are built all over the world, it takes time.”

So, whichever way we look, and whichever experts we ask, the global chip shortage is showing no signs of abating. For Brazil’s auto manufacturers, making supply meet demand will be the biggest test of the last few decades.

Need Electronic Components?

When you need to source hard to find electronic components quickly because of allocation, long lead times, obsolescence, or quality issues, contact Lantek for a fast response to your enquiries and a reliable on time delivery. Email Sales@lantekcorp.com or call 1-973-579-8100 today.

 

 

 

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component shortage Electronic Components

Perfect storm’ creates electronic component shortages

Perfect storm' creates electronic component shortages

A perfect storm has hit the electronic components market, creating supply chain problems that will be felt for several years.

The perfect storm

Even before the COVID-19 pandemic, most electronic component manufacturers were running at 95-98% capacity.

This high demand for electronic components was fuelled by growth in technologies like automation and the Internet of Things – technologies that are only in their infancy now but will mature in the next decade.

This high manufacturing output was felt across all types of components, especially chips (semiconductors, memory) and integrated circuits. It was even difficult to get a hold of some active and passive components in 2019.

Then, in 2020, the COVID-19 pandemic hit. Car manufacturers and other manufacturers affected by shutdowns paused orders for electronic components. Meanwhile, manufacturers benefitting from lockdowns scaled up.

Now, with the development and roll-out of COVID-19 vaccines, industries that shut down have opened up again. But there’s a problem – demand for electronics has not wavered and there isn’t enough manufacturing capacity to serve everyone.

Quite simply, there isn’t enough bread to go around.

Demand is ramping up

We are now in a situation where electronic components manufacturers are running at 99-100% capacity. Demand has soared for all types of components, from chips and memory to diodes and displays. This is squeezing most supply chains.

There are so many contributors to this squeeze. Emerging technologies like AI, automation, virtual reality, augmented reality and machine learning are fuelling demand for smarter chips and data centre modernization, while technologies like 5G and Wi-Fi 6 are demanding infrastructure rollout, which requires a significant effort.

When it comes to chips, however, cars are the biggest users. Cars can have as many as 22,000 multilayer ceramic capacitors (MLCCs) each. This will increase as cars get smarter (a self-driving taxi sounds great, but it’ll need around 30,000 chips).

Suppliers are slowly adapting

There has been years of under-investment in new foundries and plants. This under-investment has affected manufacturing capacity today.

To their credit, most manufacturers are looking to expand capacity by setting up new foundries or acquiring plants. Trouble is that most plants take years to set up. Some plants that started a build in 2017 are still being built.

Staffing is also an issue. The biggest challenge suppliers face is social distancing and COVID prevention policies, which have reduced staff numbers in many factories.

You can’t automate every process in a factory, so it is a given that having fewer staff will increase lead times. Some manufacturers have been harder hit than others with this, but all will experience staff shortages during the pandemic.

In addition to this, freight has become more challenging during the pandemic. Things are taking longer to move and there are fewer commercial flights. Global shipping rates have skyrocketed during the pandemic because of this. Higher shipping rates have contributed to price increases for most electronic components.

Weathering the storm

We predicted the electronics component shortage in early 2020 following the USA’s national lockdown. We knew supply chains would be squeezed and stretched due to changes in economic output and industry trends.

The best way to weather the storm is to work with us or another reputable electronic components distributor. We focus on delivering outstanding service, with industry leading quality and dependability. Call us at 001 973 579 8100 to chat.

 

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component shortage Electronic Components

IBM says chip shortages could last two years

IBM

IBM says chip shortages could last two years

As technology has advanced, semiconductors have found their way into everything that requires computing power from coffee machines to cars. But the manufacturing output for semiconductors has not kept up with this change.

The semiconductor industry has also been hit with an industry rotation in demand that it was never prepared to deal with.

This happened at the start of the coronavirus pandemic when automotive manufacturers scaled back semiconductor orders. Lockdowns meant they weren’t making enough cars, so they scaled-down and battened the hatches.

Meanwhile, the demand for data center, computing, and home device semiconductors soared. Rather than finding themselves down on orders, semiconductor makers were all of a sudden making more semiconductors than ever before.

And then the automotive sector came roaring back.

Now, the semiconductor industry is in a state of disarray. Manufacturers are struggling to make enough chips in a situation we’ve called Chipageddon. This is compounded by the fact that silicon prices are soaring, making chips more expensive.

How long will the chip shortage last? The latest opinions don’t deliver good news – IBM says the chip shortage could last 2 years.

IBM isn’t alone

There is a serious imbalance in the semiconductor industry, and this is a problem many companies are having to contend with.

For example, Ford cancelled shifts at two car plants earlier this year and said profits could be hit by up to $2.5bn due to chip shortages. Meanwhile, Apple announced it would take a $3 billion to $4 billion hit due to the global chip shortage.

However, the most telling story of the semiconductor shortage comes from Samsung.  

Samsung is the world’s largest manufacturer of DRAM and the world’s fourth largest semiconductor manufacturer but are also experiencing shortages, to the point of having to delay the launch of the next-gen Galaxy Note until as late as 2022.

The fact that Samsung is experiencing a chip shortage when it manufactures its own chips tells us everything we need to know – the chip shortage is severe. It isn’t a small shortage at all – it’s an enormous shortage affecting everyone across the supply chain.

Unfortunately, it looks like the global semiconductor shortage will be around for a few years yet, and things could get worse before they get better.

Semiconductor woes

The semiconductor shortage is the result of a catalogue of problems going back several years. Here are some of the highlights:

Intel’s woes

Intel is the world’s leading supplier of CPUs for PCs and data centres and in 2018 they caused a chip shortage with the troubled development of 10nm chips. Intel’s mistakes have led to a shortage in CPUs for computers.

Declining DRAM prices

DRAM is a computer’s main memory. In 2019 and 2020, prices for DRAM declined, causing the biggest players – Micron, Samsung and SK Hynix – to curb their output. This led to supply constraints when the coronavirus pandemic hit.

Super cycle

The global demand for chips has hit an all-time high. Data centres, computers, cloud services, augmented reality, 5G, connected devices and connected vehicles are fuelling demand. This is great for chip sales, but the industry can’t keep up.

Tech war

The U.S. created a semiconductor shortage of its own when they levied sanctions against several Chinese companies, including SMIC and Huawei. This exasperated the chip shortage, placing strain on domestic manufacturers.

Coronavirus pandemic and cancelled orders

During the coronavirus pandemic, demand for semiconductors soared in some industries (e.g. electronics) and dropped in others (e.g. automotive). When demand came back for “down” industries, demand didn’t drop for “up” industries, leading to a shortage.

Fierce competition

We now have a situation where carmakers are battling the electronics industry for chips. There aren’t enough chips to go around and increasing manufacturing capacity is impossible without significant investment in new foundries.

Meeting demand

The electronics super cycle is not going to end anytime soon because there are so many tailwinds, including self-driving cars, VR, AR, AI, 5G and space travel. So, we cannot expect demand to drop and the chip industry to catch up with itself.

To meet demand, we need new foundries which take 12-24 months to set up. Many companies are already building new foundries, or are boosting capacity at existing plants, which is good news for the long run.

In the here and now, manufacturers can meet demand for chips by partnering with an electronics component distributor like us. We specialize in the procurement and delivery of electronic components and parts (including semiconductors) for a wide variety of industries from the world’s leading manufacturers.

The semiconductor shortage has affected the entire manufacturing supply chain but our close links in the industry mean we have better access to chips than most. No promises, but we have an excellent track record across all sectors.  

Get in touch with us to discuss your needs. We’re here to help.

Call: 001 973 579 8100

Email: sales@lantekcorp.com 

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Electronic Components

Who are the biggest players in the semiconductor industry?

Who are the biggest players in the semiconductor industry?

Over the next decade, demand for semiconductors is going to go supersonic thanks to secular and cyclical tailwinds.

Semiconductors are the building blocks of the information age; every device that will be ‘connected’ needs a semiconductor. The companies that manufacture semiconductors are the unsung heroes of the future. But who are they?

In this article, we will briefly cover the biggest players in the semiconductor industry.

Foundries

Foundries concentrate on manufacturing and testing physical products for fabless companies. Some companies, like Intel, are both fabless and foundry, meaning they design and make their chips. Foundries often serve as a non-competitive manufacturing partner for fabless companies. The following list contains the biggest foundries:

TSMC

TSMC (Taiwan Semiconductor Manufacturing Company) is the world’s largest semiconductor manufacturer by a significant margin. They are expected to capture 56% of the semiconductor market in 2021 (up from 54% in 2020). 

UMC

UMC (United Microelectronics Corporation) is a Taiwanese company. They are the second largest semiconductor foundry in the world behind TSMC. UMC specialise in mature nodes, such as 40nm nodes and other speciality logic.

SMIC

SMIC (Semiconductor Manufacturing International Corporation) is a Chinese company. They are the third largest semiconductor manufacturer in the world. They specialise in process nodes from 0.35 micron to 14 nanometres.

Samsung

Samsung Electronics is a South Korean company. They are the world’s largest manufacturer of DRAM and the world’s fourth largest semiconductor manufacturer. They are expected to occupy 18% of the semiconductor market in 2021.  

Micron

Micron is an American company. They are the second largest manufacturer of DRAM (dynamic random-access memory) behind Samsung. DRAM is semiconductor memory used in consumer electronics, computing equipment and IoT devices.

SK Hynix

SK Hynix is a South Korean company. They are the world’s third largest manufacturer of DRAM and a leading manufacturer of NAND flash memory. In 2019, they developed HBM2E, the world’s fastest high bandwidth memory.

NXP Semiconductors

NXP Semiconductors is a Dutch-American company. They manufacture ARM-based processors, microprocessors and logic across 8, 16 and 32-bit platforms. Their products are used in automotive, consumer, and industrial markets.

Powerchip

Powerchip Technology Corporation is a Taiwanese company. They manufacture DRAM and memory chips, semiconductors and integrated circuits. They use a 300mm wafer production technology which can produce advanced and mature chips.

ON Semiconductor

ON Semiconductor is an American company. They design and fabricate chips and microprocessors for automotive, aerospace, industrial, cloud and Internet of Things devices. They have over 45 years’ of experience in the foundry business.

Fabless companies

“Fabless” means outsourced fabrication. Fabless companies concentrate on the research and development of chips and semiconductors. They then outsource the manufacturing of the product to a foundry. This relationship is non-competitive, and the foundry is normally a silent partner. The following list contains the biggest fabless companies:

MediaTek

MediaTek is a Taiwanese company. By market share, they are the world’s leading vendor of smartphone chipsets. They are also a leading vendor of chipsets for other consumer electronics including tablets and connected TVs.

Qualcomm

Qualcomm is an American company. They are the world’s biggest fabless company. Their product catalogue includes processors, modems, RF systems, 5G, 4G and legacy connectivity solutions. They are best-known for Snapdragon Series processors.

Broadcom

Broadcom is an American company. Depending on which figures you read, they are either the first or second largest fabless company in the world. Broadcom’s products serve the data centre, networking, software, broadband, wireless, and storage and industrial markets.

NVIDIA

NVIDIA is an American company. They are the market leader for high-end graphics processing units (GPUs). In 2020, NVIDIA GeForce GPUs accounted for 82% of GPU market share. This is significantly more than AMD Radeon graphics cards, which accounted for 18%.

AMD

AMD is an American company. They design high-performance GPUs and processors for computers, where they command the second biggest market share behind Intel. Their GPUs compete against NVIDIA’s but are not considered as powerful.

Himax

Himax is a Taiwanese company. They are a leading vendor of automotive chips and semiconductors for connected devices. Their semiconductors are used in TVs, monitors, laptops, virtual reality headsets, cameras and much more.

Realtek

Realtek is a Taiwanese company. They are a fabless semiconductor company focused on developing IC products (integrated circuits). They are best-known for SoCs (System-on-Chips) network (Ethernet) and wireless (Wi-Fi) interface controllers.

Integrated device manufacturers

Some companies have foundry and fabless arms. These companies often design and fabricate their own products or design and fabricate chips for others. These integrated device manufacturers (IDMs for short) blur the line between foundry and fabless with an in-house production process that utilises little if any outsourcing. IDMs include:

Intel

Intel is an American company. They design and manufacture their own chips which they package into CPUs. Intel’s market share in the CPU market has declined in recent years, but they remain one of the top semiconductor manufacturers.

Analog Devices

Analog Devices is an American company. They have a 150mm wafer fab and a 200mm wafer fab. They have fabless production facilities and have made numerous fabless acquisitions over the years, such as OneTree Microdevices in 2017.

Texas Instruments

Texas Instruments is an American company. They have 14 manufacturing sites including silicon foundries. They specialise in the production and manufacture of wafers, digital signal processors, integrated circuits and embedded processors.

Overall

You may have noticed that the US and Taiwan dominate the semiconductor industry on the foundry and fabless side. Among the biggest semiconductor companies, the largest proportion are based in the United States. However, Taiwan is the foundry king, with the two biggest players based there (TSMC and UMC).

Semiconductors are used in all electronics that require computing power, including smartphones, PCs, and data centres and cars. A surge in demand for chip-based products will fuel the need for more semiconductors in the future. It will be up to the big players on this list to meet that demand and power our future.

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component shortage Electronic Components Lead Time

Why We’re Facing a Global Semiconductor Shortage

semiconductor

Why We're Facing a Global Semiconductor Shortage

The world is experiencing a semiconductor shortage at a time when demand for semiconductors is at an all-time high. Manufacturers can’t make enough of them and we’re now seeing this affect the availability of products. You probably remember last year Sony released the PlayStation 5 and Microsoft released the Xbox Series X. AMD released the Big Navi GPU (RX 6000) and Apple released the iPhone 12 range. What all these products have in common is they were all directly affected by the semiconductor shortage. Demand well and truly exceeded supply.
What’s causing the shortage?
A perfect storm has hit the semiconductor market. It isn’t one thing but a combination of different things that’s causing the shortage today.
The COVID-19 pandemic
When the COVID-19 pandemic hit, car and commercial vehicle sales took a hit. Estimates suggest that sales fell by 50% or more within a single month. In response, car manufacturers scaled back orders for semiconductors and other parts. At the same time, demand for electronics chips soared as more people spent time working from home and on furlough. Laptops, smartphones, drones, smartwatches, tablets, kitchen appliances – everything has a semiconductor nowadays. Then you have IT, data centres, internet infrastructure and cloud and edge computing. All are powered by semiconductors. And so, the factories that were at capacity making semiconductors for cars switched to making semiconductors for electronics. This was a blessing in disguise for factories because semiconductors for electronics have a higher margin. However, it has caused a problem for car manufacturers who now need to ramp up production. The situation now is this – car sales are picking up and car manufacturers are fighting for orders against electronics manufacturers. Factories are at capacity and can’t make enough to go around. This is feeding through to nearly every sector. Ultimately, this is the result of poor planning from car makers who cut orders too deeply last year at the beginning of the COVID-19 pandemic.
Manufacturing limitations
Even before the COVID-19 pandemic hit, there weren’t enough factories to meet semiconductor demand. There were long lead times in 2019 because semiconductor demand outpaced the ability of factories to make them. This problem has persisted through to 2021 and has been compounded by the COVID-19 pandemic. With most factories running at 99-100% capacity, there is very little room for boosted output. You would think that the solution is to build more factories, but this would not solve the problem today or even a year from now because semiconductor fabs take at least a year to build with another 6-12 months in setup time. Semiconductor manufacturers are investing in new factories, expansion and more efficient technologies, but short-term solutions these are not. The US is attempting to bring semiconductor manufacturing to US soil to remedy this or at least reduce dependency on foreign suppliers.
US and China trade war
Calls for domestic manufacturing are heating up in the US and China, the result of a trade war brought about mostly by supply chain disruptions related to the COVID-19 pandemic. Reports in May 2020 that the Trump administration was in talks with Intel, TSMC, and Samsung about building US chip factories proved true. In 2021, with a new president and Biden administration, these talks are persisting. The reason a technology trade war broke out between the US and China is because the US imposed a 25 per cent tariff on $34 billion of Chinese imports in 2018. There has been bad blood ever since with threats and action on both sides. This eventually affected the semiconductor supply chain because in 2020 the US turned to export restrictions targeting the semiconductor supply chain to safeguard critical infrastructure in the telecommunications sector. This followed a 2019 ban on the Chinese company Huawei for “national security reasons”. For example, one of the consequences of export restrictions was that American firms were cut off from chips made by China’s Semiconductor Manufacturing International Corporation – the third largest chip maker in the world with 11% market share.
Local production problems
Factory shutdowns due to natural disasters, bad weather and the COVID-19 pandemic have caused semiconductor supply chain issues. Most of the world’s semiconductors are manufactured in Taiwan. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, has a 28% market share. The second largest, UMC, also based in Taiwan, has a 13% market share. Taiwan is experiencing serious water droughts in 2021. Millions of tonnes of water are required to manufacture semiconductors every week. Taiwan Semiconductor Manufacturing is having to bring water in on trucks and UMC are doing the same. This has caused significant drops in manufacturing efficiency. The US is also experiencing shutdowns. NXP Semiconductors had to shut its plant in Austin, Texas, due to winter weather in February 2021. Factory shutdowns cause order backlogs and extended lead times. Orders persist and pile in whether a factory is down or not. This squeezes supply chains, causing a shortage.
How long will the semiconductor shortage persist?
We expect the semiconductor shortage to persist through 2021 but ease towards the end of the year as demand for electronics chips decreases as COVID-19 lockdowns end. This will cause a shift in supply from electronics semiconductors to automotive semiconductors which will provide the industry with a much-needed equilibrium. The world’s largest semiconductor manufacturers – TSMC, UMC, SMIC, Samsung, Intel, SK Hynix – are investing in increased output. Many investments were in the pipeline as early as 2019 and are expected to yield results at the end of 2021. Right now, there is a serious imbalance in the demand for semiconductors, one that our existing infrastructure is not built to cope with. This imbalance will ease over time.
How can supply chains continue to meet demand?
If you have been impacted by the semiconductor shortage you can meet demand by partnering with an electronics components distributor like us. We specialise in the procurement and delivery of semiconductors and parts for a wide variety of industries from the world’s leading manufacturers. You can find out more about what we do here.
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Electronic Components Semiconductor Transistors

Chipageddon is upon us

Electronic Component

Chipageddon is upon us

Semiconductors go unseen yet they are at the heart of all our electronics. When supplies run short manufacturing lines slow down and the availability of products is affected. Last year had several examples, some of which may have affected you.

AMD’s Radeon RX 6800 XT GPU was released in December but got nowhere close to meeting demand. Sony’s PS5 and Microsoft’s Xbox Series X sold out immediately and are rarer than hen’s teeth today. Even Apple admitted that the chip shortage affected sales of the iPhone 12 because they had to stagger product launches.

Then, near Christmas, the word “Chipageddon” was used by an automotive industry insider to describe the chip shortage affecting the automotive industry.

Chipageddon

It’s easy to overreact about things, but today’s chip shortage is worth getting in a sweat about. Supply and demand is faltering, and manufacturers are genuinely struggling to get the chips they need to make products.

Supply and demand is a basic economics model linking the relationship between the quantity of a commodity available and the quantity people want to buy to price determination. When supply exceeds demand, prices increase. When the opposite happens, prices decrease. It’s easy enough to understand.  

If you’re still with us, the chip shortage has had two main impacts:

  • Fewer chips are available
  • Prices for chips are increasing

This is a double whammy. It means manufacturers are making fewer products and paying more to make them. These costs DO get passed to you, the consumer. It’s the reason why you see random 10% increases in smartphone prices.

You also have the issue of foundries running at max capacity coupled to the low number of foundries that manufacture the newest wafers.

Industries worst hit

By far the worst-hit industry by a chip shortage is the automotive industry. The world’s largest carmakers are facing a critical shortage of semiconductors at a time when demand is increasing, and cars are getting smarter.

Today’s cars have as many as 50 semiconductors that run a variety of systems. In a few years, this number is expected to increase to over 100. 60 million cars are produced each year worldwide. It means the industry needs 3,000,000,000 semiconductors, an enormous number whichever way you look at it.

Another industry hit hard by a chip shortage is consumer electronics. Smartphone manufacturers like Apple and Samsung are struggling to meet demand because there are not enough semiconductors to go around. Sony and Microsoft can’t manufacture as many game consoles as they need to because of lack of supply.

What’s the solution?

Chipmakers need to expand capacity and build more factories. Manufacturers need to consider alternatives to primary component suppliers. The issue is that chip fabrication plants take two years to set up and a low-quality chip can stop an expensive product from shipping. This is as much a quality demand issue as a supply one.

One way you can make sure you have the chips you need is to partner with an electronic component distributor like us. We specialise in the procurement and delivery of electronic components and parts for a wide variety of industries.

Call: +1 973-579-8100

Email:sales@Lantekcorp.com