Welcome to 2021, #Chipaggeddon.
A new report shows that in the face of unprecedented demand, chip manufacturers are increasing the price of wafers, leading to exceptional revenues across the industry. A wafer is a thin slice of semiconductor, such as a crystalline silicon, used for the fabrication of integrated circuits and, in photovoltaics, to manufacture solar cells.
With electronics manufacturers around the world scrambling to secure components in the midst of a global shortage of semiconductors, chip factories are working at full speed – and seeing the benefits of such a sudden boom in demand.
Since the start of the COVID-19 pandemic last year, in effect, the demand for semiconductors has sky-rocketed. Companies deployed laptops and smartphones to their newly-remote employees, schools and universities brought learning programs online, and users stuck at home turned to tablets, games consoles and TVs to keep themselves busy during months of lockdown.
As a result, product manufacturers ramped up their demand for the semiconductors that power most modern-day electronic devices. The sales of semiconductors used in PCs, for example, jumped by more than 17% compared to 2019.
In other words, foundries have been operating at their maximum capacity; yet they are still unable to fully meet the demand for chips, which has led to a global shortage of semiconductors that is now trickling down to industries ranging from automotive to home appliances.
There is no sign of demand for semiconductors wavering in the next few months. The trend is likely to last for as long as additional capacity is needed to produce semiconductors – which isn’t expected to happen until at least the end of the year. TSMC, for one, has pledged $100 billion to boost capacity, but due to the complex nature of chip manufacturing, foundries will take some time to come online. According to analysis firm Gartner, semiconductor supply will only reach normal levels again from the second quarter of 2022 onwards.
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