Chip crisis will continue into 2022, big business for manufacturers
Thursday 13 January 2022 – 11:00
Chip crisis will continue into 2022, big business for manufacturers
The balance postponed to 2023, businesses and governments move
Rome, 13 Jan. (askanews) – At the dawn of a new digital era, in which cars are driven autonomously thanks to fifth generation networks and artificial intelligence is increasingly settling at the center of human activities, there is no longer a need and however scarce of the chips, the microprocessors without which nothing of everything that circulates and works today would have life. This scarcity, which in 2021 forced several large companies to review their production strategies, is increasingly enriching some giants of the sector located in East Asia, in positions at times of high geopolitical risk, and is forcing governments and economies to give themselves a move. .
TSMC (Taiwan Semiconductor Manufacturing Company), the world’s leading third-party chip supplier, today announced the results for the last quarter of 2021: numbers that, not unexpectedly, do what is happening. The semiconductor giant, which produces chips for iPhones, among other things, reported profits that reached $ 166.23 billion in New Taiwanese (€ 5.27 billion), + 16.4 percent compared to the same period of 2020, and revenues of 438.19 billion Taiwan dollars (13.9 billion euros), +21.2 percent on an annual basis. As for the whole of 2021, the increase in sales was equal to 18.5 percent, for a value of 1,587 billion Taiwanese dollars (50.31 billion euros), and profits reached 596 , 54 billion Taiwanese dollars (18.9 billion euros), with a +15.2 percent year on year.
Those of TSMC – a company located in Taiwan, therefore in an island with high geopolitical risk – were found to be in line with the performance of its main competitors. Samsung Electronics, the South Korean chaebol (conglomerate) that is a world leader in the production of memory chips, last week revealed that in the last quarter of the year it had estimated sales of 76 trillion won (56.05 billion). euros) and operating profits of 13,800 billion won (10.18 billion euros), with an increase of more than 50 percent.
The record results are the result of a situation that saw the dynamics of the prices of these key components make a decisive leap upwards. TSMC, for example, has raised its prices by up to 20 percent. The justification given is the fact that it is committed to investments with a three-year plan that includes a commitment of 87.7 billion euros to strengthen its production capacity and respond to the semiconductor furniture crisis that has plagued several production sectors in 2021.
The combination of the boom in demand for electronics, partly driven by the pandemic-19 and partly by Covid by the digital transition of sectors such as mobility and cloud computing; a long series of natural disasters and accidents that have had a severe impact on the availability of chips on the market; and, finally, the effects of the crisis between the United States and China, which has caused a bottleneck in the supply of chips in sectors highly dependent on these components, starting with that of cars.
In July, Stellantis CEO Carlos Tavares announced a 2021 production cut of around 1.4 million vehicles. In September, Japan’s Toyota Motor, the world’s leading automobile manufacturer, had to shut down its production plants in the Rising Sun several times. General Motors, Ford, Opel and several other automakers have had to downsize and postpone their production.
Things have not gone well for the consumer electronics sector either, with impacts for both video game consoles and the smartphone sector. Apple, for example, cut production of its iPhone 13S by 13 percent last year.
The chip crisis has highlighted the strong geopolitical imbalance of this supply chain, which sees the vast majority of production relocated to East Asia. The top three in the world are Samsung (South Korea), TSMC (Taiwan), SK Hynix (South Korea). No producer outside the East Asian region, neither American nor European, is in the top ten worldwide for sales. And China itself, which also has some champions such as SMIC and Foxconn, appears to be a step backwards compared to Taipei and Seoul.
This strategic imbalance has become part of the governments’ agenda. US President Joe Biden signed an order in February 2021 with the aim of bringing semiconductor production to the US, and in June he put $ 52 billion on the plate under the new ‘United States Innovation and Competition Act’ (USE). Furthermore, with the ‘CHIPS For America Act’ rule, he placed this strategic issue among the matters of national defense.
Europe itself has moved. The President of the Commission Ursula van der Leyen has launched the ‘European Chips Act’ which aims at a European ecosystem of semiconductors capable of European with the continental industry.
The business world has also taken some steps. Intel, a longtime American chip brand once dominant in the global market, has announced a $ 20 billion piano to bolster its production in Arizona. Germany’s Bosch has revealed plans to bolster wafer production at its Reutlingen and Dresden plants.
For its part, TSMC has begun construction of its second US $ 12 billion manufacturing facility in Arizona. It also announced that it is starting to build its first chip factory in Japan in collaboration with its main Japanese partner, Sony. Still, it said it had increased its chip production for the auto industry by 60 percent.
To enter the game, South Koreans SK Hynix, which would be on the possibility of opening a wafer production plant in the United States, and Samsung which will build a semiconductor factory in Texas with an investment of 17 billion dollars have also activated.
In the auto industry, last month Stellantis signed a deal with Chinese electronics maker Foxconn – which is the world’s largest iPhone assembler – to develop new chips for the automotive sector. ‘With Foxconn, we aim to create four families of chips that will cover more than 80% of our semiconductor needs, reducing complexity and simplifying the supply chain. This will also increase our ability to innovate faster and build products and services at a rapid pace, ‘explained Tavares.
In short, large investments destined to dare their fruits over time. For now, however, the long wave of the chip crisis persists, even if it is easing it is conserved. For 2022, expectations for mobile chips, according to a recent analysis by Deloitte, are expected to shorten. According to this forecast, while in mid-2021 they waited between 20 and 52 weeks to obtain the semiconductors and caused production stops and important customers, in 2022 the expectation should drop to 10-20 weeks and in 2023 it is estimated it should decrease. at 10-20 weeks and in 2023 a return to equilibrium.
The point is that demand continues to remain above long-term dynamics. According to Deloitte, in 2021 the pandemic resulted in a regretful increase in demand for chips by 50 percent and the cloud computing industry increased its by 30 percent to be able to build its data centers. To this must be added the fact that the need for chips in the automotive sector is subject to a long-term upward trend and there will be a significant increase in demand also in the healthcare sector. Not to mention the needs of the artificial intelligence sector, which is increasingly hungry for semiconductors.
The latest estimate provided by World Semiconductors Trade Statistics (WSTS) estimates that in 2021 there was an increase in the chip market of 25.6 percent, for a total size of 485 billion euros, and that this growth still continues. in 2022, albeit to a lesser extent equal to 8.8 per cent and will bring the market to a value of 527 billion euros.
SHARE ON:
