An increase in demand for new high-end electronic devices is expected during the second half of this year, especially for the holiday season. With a rise in demand for these devices right around the corner, OEMs are racing to put themselves in the best position possible. Having preferential access to a designated manufacturer is desired, but seemingly only possible through capacity commitments. If you buy the most, you'll be guaranteed the stock. Let's just hope you can sell it.
Large OEMs such as Apple, Samsung, and Lenovo are often favored because of the volume of chips they order and their willingness to pay top dollar. Apple, for example, already has access to Taiwan Semiconductor Co,’s latest 3nm nodes that will be used in the chip to power the iPhone 15Pro. By placing large orders in advance and reserving capacity, Apple represents 25% of TSMC’s revenue.
Locking in the inventory for these large manufacturers may come easy to them, but this leaves smaller OEMs struggling to compete at the same level.
Not all OEM’s can risk orders of such large quantities with the unpredictable state of the semiconductor industry. Most are still trying to recover from having excess inventory on their hands when the chip demand weakened, so it’s quite a risky move to put in large orders now simply based on future predictions. However, if the forecasts are correct, and demand will indeed rise moving toward the year's end, some risks will have to be taken.
As the chip shortage fades away, the capacity war begins... for now.