Chips for chipmaking machines are affected by chip shortage, says TSMC and Intel

One of the catch-22s of the global component shortage is that chips for chipmaking machines are one of the items in short supply, say execs from Intel and Apple chipmaker TSMC.

Buying new chipmaking machines was never a speedy process, given their complexity and delicacy, but lead times before the pandemic were measured in months. Now, say chipmakers, that time can be as long as 2-3 years …

Background

The global chip shortage was created by a mix of factors. There were several factors that contributed to the global chip shortage. These included increased demand during pandemics, COVID-related production disruptions, and growing demands for chips from car-makers. Cars rely increasingly on microprocessor units.

The biggest problem isn’t with GPUs or CPUs but more common chips such as power management and display drivers. This low-tech chip is used in many devices including Apple’s.

Apple CEO Tim Cook revealed that supply constraints cost Apple $6B in two quarters, and warned that the hit could be as high as $8B this quarter.

A recent report says that there have been shortages across seven chip categories, and that four of them will continue to be affected throughout 2022.

The vicious circle of chips for chipmaking machines

The industry is suffering from a vicious circle: the global chip shortage needs chipmakers to boost output, but that requires additional chipmaking machines which they can’t get because of the global chip shortage.

While many commentators say they expect the chip shortage to ease by the end of this year, the WSJ reports chipmaking companies describing that as an overly optimistic view.

What began as an epidemic-era aberration in supercharged laptop demand has turned into a major structural problem within the industry. Now many chip executives say the problem will persist into 2023 and 2024, or even longer.

“There’s this wishful thinking that by the end of 2022, supply will be balanced with demand,” said Tom Caulfield, chief executive of contract chip manufacturer GlobalFoundries Inc. “I just don’t see it.”

Advantest America’s chief executive, Doug Lefever said that the typical lead time for his machines which check whether new chips work correctly have increased by at least two times. “I think we’re in it for quite a while before we get completely back to standard lead times,” Mr. Lefever said.

Some chipmakers are prioritizing clients who produce chipmaking machines.

Ganesh Moorthy, CEO of Microchip Technology Inc., a maker of microcontroller chips that process data in all kinds of electronic devices, including chip-making equipment, said his company now is treating chip-equipment suppliers as priority customers, not unlike the way it treated medical-device manufacturers at the onset of the Covid pandemic.

Intel, and Apple chipmaker TSMC also support this idea.

A recent industry white paper argued the benefits of such a “multiplier effect.” A sophisticated testing tool requires 80 specialist chips that can be reprogrammed after they are produced, the analysis said, but then aids in making 320,000 of those same chips each year.

Photo: ASML