The semiconductor shortage, which began in early 2021, has left equipment manufacturers grappling to meet production plans and sparked questions about its end. Rumors in the automotive sector suggest the shortage may persist for years. This article delves into the causes, current state, and future prospects of the semiconductor shortage.
The shortage has significantly impacted the auto industry, which primarily relies on microcomputers, analog, and discrete devices, in contrast to PCs and smartphones that demand more memory and logic. In-vehicle systems, responsible for controlling functions like running, turning, and stopping, are less dependent on memory and logic, linking them closely to the semiconductor shortage.
The COVID-19 pandemic emerged in 2020, during which smartphone demand remained weak, but the supply of 5G-compatible devices lagged. Consequently, manufacturers concentrated on memory and logic production, aggressively investing in miniaturization and large capacity equipment.
Conversely, investments in microcomputers, analog devices, and discrete devices were more conservative, as these components do not require miniaturization or high capacity, and in-vehicle semiconductor demand was expected to be subdued in the first half of 2020 due to reduced car sales.
By 2021, the pandemic persisted, but global economic activity gradually revived. As industries attempted to restore car production and normal operations, it became apparent that there were insufficient parts and materials. Semiconductors, in particular, struggled to adapt rapidly to fluctuating demand. The global semiconductor market swelled to over $580 billion, fueled by PCs, smartphones, and versatile semiconductors utilized in diverse electronic devices.
Despite the stabilization of coronavirus countermeasures, some regions experienced lockdowns, resulting in delays in customs clearance and cargo transportation. Semiconductor manufacturers ramped up their supply capabilities, but users still faced production challenges. With the number of power transistors required per vehicle rising due to electrification, procurement departments have begun ordering excess semiconductors.
In anticipation of longer delivery times, it has become customary to order 120 or 130 pieces when only 80 out of 100 are delivered, generating short term demand. Had all users calmly ordered necessary quantities without competing for semiconductors, supply issues might have been avoided. However, this is not the reality, especially for products with diverse applications like microcomputers, general-purpose analog, and discrete devices. Distribution network challenges have compounded the difficulty of securing required quantities for users scattered worldwide.
The scarcity of microcomputers, general-purpose analog devices, and discrete devices can be partially attributed to an inadequate distribution network. Nevertheless, foundry firms have ramped up production, bolstering the supply chain. Infineon Technologies’ postponed new plant opening, initially slated for 2021, is a contributing factor to the power transistor shortage. As the launch nears, the persistent shortage is expected to wane. By the first half of 2023, we anticipate a resolution to the shortage, including power transistors.
WSTS data reveals that the small-signal transistor market, which previously enjoyed double-digit growth, experienced negative growth in September 2022, worsening to double-digit negative growth by November 2022. While the general-purpose analog market maintained positive growth in November 2022, the rate decreased from double to single digits, suggesting a diminishing short-term demand. The power transistor market sustained double-digit growth in November 2022, primarily propelled by robust in-vehicle demand. The micro market has witnessed negative growth since April 2022, with a divided trend: MPUs at approximately -20% and MCUs at around +20%.
In layman’s terms, computer demand is subdued, but cars and industrial equipment are experiencing robust demand. The supply shortage is expected to conclude by mid-2023. The fate of the temporary excess inventory remains uncertain. Given the ineffective distribution network, it is challenging to pinpoint the location of all semiconductors. It is hoped that drastic price declines will be averted, and promptly identifying inventory locations will help minimize confusion. In the meantime, semiconductor trading companies have a unique opportunity to play a significant role.
