Tuesday, June 22

‘It’s a Roller-Coaster Ride’: Global Chip Shortage Is Making Industries Sweat


Dan Rozycki, the president of a small engineering firm, worries about what a global semiconductor shortage could mean for curing concrete.

Mr. Rozycki’s company, Transtec Group in Austin, Texas, sells small sensors that are placed where concrete is poured at building, highway and bridge construction sites. The gadgets take temperature readings and wirelessly send data so workers with computers can ensure the material is hardening properly.

Like many other things in the modern world, from computers and cars to cash registers and kitchen appliances, the sensors require a couple of common, inexpensive semiconductors that have suddenly become a very scarce commodity.

“Every month our product is getting more popular,” Mr. Rozycki said. “But we may not be able to make it in several months.”

The supply problems are as multifaceted as the nearly $500 billion semiconductor business. Manufacturers turn silicon wafers to chips in complex processes using chemicals, gases and costly machines. Finished chips cross national boundaries dozens of times to partners that package, test and ship them to hardware makers and distributors.

Fixing other issues is likely to stretch into 2022. Mr. Gelsinger said Intel was talking to auto industry suppliers about shifting some production of their chips to older Intel factories, possibly starting in six to nine months. But adding new production tools to an existing chip plant can take a year. Building a new one takes three years.

“This is going to be a long healing,” said Thomas Caulfield, chief executive of GlobalFoundries, a big U.S. chip manufacturer that is doubling capital spending this year so it can meet demand.

For now, chip delivery schedules have stretched from around 12 weeks to more than a year in some cases, chip buyers and brokers said. That is bad news for companies like the webcam start-up Wyze Labs.

“We’re going to be straight up with you about some bad news we got this week,” the company wrote in a note to customers in January. “Some of our key suppliers informed us they would only be able to supply about one-third of the chips we need to make Wyze Cams.”

The company, which is based in Kirkland, Wash., predicted problems stocking the third version of its flagship webcam. The company website says it is sold out, with more inventory expected in one to two weeks. Wyze did not respond to requests for additional comment.

Supply problems can be a touchy topic, said Zach Supalla, chief executive of Particle, a San Francisco company that buys chips to make communication and computing equipment. It sells its devices to thousands of companies that make products like hot tubs, air-conditioners and industrial and medical equipment.

Particle has so far has secured enough chips to keep making its products, he said. But the company is asking customers to order further and further in advance to ensure it can meet demand, Mr. Supalla said.

When chips can be found, price markups can be stark. One particularly unglamorous widget, a type of ceramic capacitor that ordinarily sells for around 3 cents each, became hard to find when a Covid-19 outbreak temporarily closed a factory in China.

The capacitor shortage hurt production of a popular cellular modem. That modem, which normally sells for $10 to $20, spiraled to $200 on the spot market, Mr. Supalla said. Customers like car companies may be willing to pay such sums to keep producing $40,000 cars, Mr. Supalla said. But not all can.

Some buyers suspect profiteering. Jens Gamperl, chief executive of an online components exchange called Sourcengine, recounted a call from an executive who fumed that a chip normally priced at $1 each was listed for sale by the exchange at $32. Mr. Gamperl had to explain that his own company had been forced to pay $28 for the component.

“That is the kind of craziness that we see left and right now,” he said.

Besides the direct effect on hardware makers, chip shortages can reduce shipments and raise the cost of servers and networking equipment to offer services like streaming entertainment, remote learning and medicine. They can also affect software makers.

Tripp, a Los Angeles start-up that makes a kind of meditation app that exploits virtual-reality headsets from Sony and others, was banking on the new PlayStation 5 to lift software demand, said Nanea Reeves, Tripp’s chief executive. But chip shortages helped to hobble that console launch.

“We were expecting a bigger bump from the PS5,” she said. The company is hoping more consoles arrive in the second quarter.



Source link

15 Comments

Leave a Reply

Your email address will not be published.

Call Now