Chip delivery delays stretch longer as global shortage worsens
The global chip shortage is continuing to get worse, with firms dependent on new chips seeing delays in production and delivery lengthen to over a year, and in some cases until 2024.
The global semiconductor shortage has caused issues for many companies around the world, with slow chip deliveries impacting the ability for vendors to finish products and to complete orders. As the crisis rolls on, companies are seeing the delays stretch further into the future.
In the case of utility monitoring firm PowerX, an order for chips placed in May was originally expected to be delivered by the summer, but was then delayed to the fall, then winter, and is now not expected to arrive until May 2022, according to the Wall Street Journal. PowerX isn't alone, as Princeps Electronics operations director Ian Walker said some new orders from buyers had delivery dates in 2024.
Susquehanna Financial Group said chip wait times climbed from a typical 9 to 12 weeks to 19 weeks in the Summer, rising to 22 weeks in October. In some cases, such as power-management components, it's 25 weeks on average, while microcontrollers used by the auto industry can take up to 38 weeks to arrive.
Apple too is also affected by the issues in the supply chain, warning during its financial results that issues in "legacy nodes," namely modems and power regulators, are the main point of competition for the company. Accessibility of "leading-edge nodes," such as Apple Silicon, is not a problem for Apple at this time.
The shortage is caused by multiple issues, ranging from COVID-19 facility closures, reduced supplies of substrates and other basic materials, and interruptions to wafer production. Global shipping issues added to the problem, as chips can potentially travel up to 25,000 miles to become finished products.
While the supply chain for chips is one aspect, another is chip purchasing decisions, with overordering and stockpiling causing their own issues. Harvard Business School professor Willy Shih said "People are buying a lot of parts to have just in case, and that's exacerbating the shortage"
Chip producers like Apple partner TSMC have announced plans to heavily invest in facilities to improve production, but the expensive endeavors could take years to become not only operational, but to do enough to ease supplies.
Read on AppleInsider
The global semiconductor shortage has caused issues for many companies around the world, with slow chip deliveries impacting the ability for vendors to finish products and to complete orders. As the crisis rolls on, companies are seeing the delays stretch further into the future.
In the case of utility monitoring firm PowerX, an order for chips placed in May was originally expected to be delivered by the summer, but was then delayed to the fall, then winter, and is now not expected to arrive until May 2022, according to the Wall Street Journal. PowerX isn't alone, as Princeps Electronics operations director Ian Walker said some new orders from buyers had delivery dates in 2024.
Susquehanna Financial Group said chip wait times climbed from a typical 9 to 12 weeks to 19 weeks in the Summer, rising to 22 weeks in October. In some cases, such as power-management components, it's 25 weeks on average, while microcontrollers used by the auto industry can take up to 38 weeks to arrive.
Apple too is also affected by the issues in the supply chain, warning during its financial results that issues in "legacy nodes," namely modems and power regulators, are the main point of competition for the company. Accessibility of "leading-edge nodes," such as Apple Silicon, is not a problem for Apple at this time.
The shortage is caused by multiple issues, ranging from COVID-19 facility closures, reduced supplies of substrates and other basic materials, and interruptions to wafer production. Global shipping issues added to the problem, as chips can potentially travel up to 25,000 miles to become finished products.
While the supply chain for chips is one aspect, another is chip purchasing decisions, with overordering and stockpiling causing their own issues. Harvard Business School professor Willy Shih said "People are buying a lot of parts to have just in case, and that's exacerbating the shortage"
Chip producers like Apple partner TSMC have announced plans to heavily invest in facilities to improve production, but the expensive endeavors could take years to become not only operational, but to do enough to ease supplies.
Read on AppleInsider
Comments
Does this principle of supply and demand not also apply to the global semiconductor shortage? If it applies, I'd like to see the actual price increases for select chips rather than just hear that there's a shortage. If chip suppliers are not raising their prices during a shortage, they are idiots.
Right now there's a shortage of meat in my country, but I can still go buy meat in any grocery or restaurant. It's just that the prices are 20% higher. I guess meat suppliers are smarter than computer chip manufacturers.
The silicon supply and demand imbalance has affected prices.
AIB partner graphics cards are nearly impossible to get unless you pay scalper prices, at least 2x MSRP (and most MSRPs have been inflated since the beginning of 2021). There are PC graphics cards marketed as 1080p gaming boards that have current street prices around $600. Realistically they should be $200-250 tops.
Last summer I bought a brand new Radeon RX 580 for my Mac mini 2018 (to be used in an external GPU box). It was $180, below the April 2017 $229 launch price. This card features 4.5 year old graphics architecture. You can't buy this card new today because it hasn't been manufactured for some time and all of the remaining inventory was bought up months ago. You can buy a "refreshed" (read used) RX 580 card for $650. Realistically this card's value is $120-150 tops.
As we head into the holiday shopping season this situation will get worse before it gets better.
This isn't specific to PC graphics cards. Xbox Series X|S, PlayStation 5, Nintendo Switch OLED, they are all difficult to find and anything you'll find on FleaBay is overpriced thanks to the scalpers and their 'bots. Note that the newest Xbox and PS5 were launched in November last year, 11.5 months ago.
As Waveparticle notes, chip foundries like TSMC have increased pricing. The percentage increase was not equally applied across the board. Apple took lower price hikes than many other customers.
The analogue used is also not true reflection of entire market, only a small part - B2C while B2B on annual or multi-year contracts to supply (e.g. distribution/resell to restaurants, food processing plant) are prioritised and less affected (contracts usually have a variable component for ability to raise price with a cap so it is not unlimited hike).
Note: I’m not growing anything, but when I was growing up the house we bought (parents) the people who lived there before us did all those things. (Lemon, lime, apricot, peaches, nectarines, tomatoes, many other things I’m sure they saved a lot of money as a kid I didn’t understand at the time the pandemic changed that).
PS I found out later on that they were Mormon, they also had a water purifier long before it was fashionable.
If you are a business or person that plans and thinks ahead a little bit, you are still in a somewhat good position.
Even if you know that gas prices dropped, it's not like you can buy 1500 gallons right now and pour it into your swimming pool. Same with most small businesses. They don't have the facilities and resources to stockpile two years worth of toilet seat covers or cocktail napkins.
There was a recent news article I read in a local paper than highlighted the difficulties of small businesses. Business owners are paying more because of supply shortages, things like cardboard for pizza boxes. It's not like a mom-and-pop pizzeria can stockpile two years worth of cardboard. They don't have the facilities to do so.
The potato example is particularly bad. Fresh ones are perishable. It's not like you can shove a three year supply of potatoes into a pantry.
Civilization has come up with some clever ways to preserve perishables (like making dried noodles out of flour) but it's not like the Italian restaurant or ramen noodle shop on the corner can stockpile three years of dried noodles.
Let's say you serve french fries at your restaurant. Yes, you could peel the potatoes, cut them, par-fry them and then freeze them until use. The energy/real estate commitment to run warehouses with freezers over months/years is not cost effective.
Beyond that, let's say it takes X amount of equipment and Y amount of labor beyond your normal daily operations needs to fulfill a 3-year production volume for long-term stockpiling. Then what? The equipment goes idle for over 2.5 years. You fire the extra/now unneeded production workers. Is that a sustainable business model?
This would be like your aunt Millie buying 10 pallets of aluminum foil because aluminum futures just crashed by 30% or you buying 50 pairs of jeans and 200 t-shirts because cotton futures dropped by the same margin.
There was never an "armistice", why are you always so self-important and weird?