we are manufacturing more than ever and still it is not enough

  • 7

In 2021, the global semiconductor industry had a turnover of 555.9 billion dollars. For those of us who are not used to dealing with such large figures, it is often difficult to put them into perspective, but yes, it is an awful lot of money. In fact, according to Semiconductor Industry Association (SIA), last year this market grew by 26.2% if we compare it with the volume of business it had in 2020.

No doubt many other industries would sell their souls to the devil for growth like this. However, and this is the most disturbing thing, we users have a feeling of depletion a very tangible result of the difficulty we have in buying some devices that are highly dependent on semiconductors, such as computers, video game consoles, or even cars, among many other products.

This situation is causing some consumers to conclude that chips are scarce, but nothing is further from the truth. Integrated circuits are not in short supply; at the moment are being manufactured and sold more than ever. Many more than in previous years. However, and this is the root of the problem, demand has grown so much and in such a short time that semiconductor manufacturers are not being able to balance demand and supply.

There is no shortage of chips; there is a huge deficit of semiconductors

They are two different things. These statements by John Neuffer, the president of SIA, reflect very clearly the situation in which the semiconductor industry finds itself: ‘In 2021, in a general context of enormous demand, semiconductor manufacturers have substantially increased the production up to an unprecedented level of manufacturing which seeks to respond to the high demand, which has given rise to record numbers of distributed and sold units’.

An industry in the hands of TSMC and Asian factories: the map of world chip production

The graph that we publish below these lines has been elaborated by World Semiconductor Trade Statisticsand describes how revenues have evolved and business has developed year over year in the global integrated circuits industry for more than two decades. This last parameter, as we can see, has reached very notable peaks at specific times, such as, for example, in the years 2000, 2004 and 2010.

Year after year the volume of the chip market has fluctuated a lot, but its income has reflected a strong and constant upward trend

These fluctuations tell us that in those years the chip market experienced very strong growth in response to a previous stage of contraction in this industry. And, curiously, all those cycles of great growth gave way to stages in which the market contracted again in a very abrupt way.

However, if we look at the blue line, which is the one that describes the income of this industry, we will see that during the last twenty-five years they have been gradually increasing, despite having had occasional falls, up to the record number that we have handled in the first lines of this article.

Semiconductor Markets

Source: World Semiconductor Trade Statistics

This very peculiar behavior, which describes a market that until two years ago was experiencing great volatility, but whose income reflects a strong and constant upward trend, indicates that the price of chips has been increasing gradually for more than two decades. This is precisely what has contributed to income falls moderately in times of ‘lean cows’.

In the current context, chip manufacturers are interested in responding to demand because in this way their business volume will continue to grow

It is clear that in the current context, chip manufacturers are interested in responding to demand because in this way their business volume will continue to grow. And your income will continue to increase. But they are in a very delicate position. The production capacity of these companies already touched the limit before the crisis started, so going further is a real challenge.

The technological equipment that needs to be used to produce integrated circuits is very sophisticated, especially if the goal is to manufacture high-integration semiconductors. And the most advanced photolithographic processes cannot be accelerated on demand because involve extremely complex procedures which are carried out in facilities that must meet very demanding requirements.

Even so, given the circumstances, the main semiconductor manufacturers they have confessed what they are doing all that is in your hand to increase production within the moderate room for maneuver they have. In this context there are no miracle remedies. The definitive solution to this crisis involves setting up new factories that allow this industry to respond to demand. Chip producers are on it, but the first signs of recovery won’t come until next year.

Cover Image | TSMC

Via | Semiconductor Industry Association

In 2021, the global semiconductor industry had a turnover of 555.9 billion dollars. For those of us who are not…

In 2021, the global semiconductor industry had a turnover of 555.9 billion dollars. For those of us who are not…

Leave a Reply

Your email address will not be published.