IC Chip Shortage — Starting To Smell Fishy

[Jimaz]

Does anyone have any inside knowledge about why this expensive shortage continues so stubbornly? News stories are all over the map trying to predict its end.

Everything I've ever seen about the manufacturing process shows that it's one of the most, if not the most, heavily automated industries in existence. I would think the few, sparsely distributed humans involved in the process would make it far less susceptible to Covid19 impacts.

Most of the work has to happen in clean rooms anyway, further reducing Covid19 transmission risks.

As far as I can tell, the slowest part of the process is the growing of the initial boules. Crystals have to be grown slowly to avoid disclinations but I can't imagine how that process would be impacted by Covid19.

Could this be an artificial shortage created to strongarm higher chip prices under cover of Covid19?

[Richard]

They would not need to strong arm,in my business prices have gone up over 400% ,so it is already excepted that our course is following Venezuela where it takes a bag of cash to buy a slice of cheese,the general public is living the reality that those at the top appear to be oblivious to.

I have my doubts if things are actually under the cover of Covid or Covid was by design,because at the end of the day the average person is falling faster into poverty then they realize and in a larger number then we have seen in a long time.

Prices are higher to the consumer but those select few at the top are taking in massive amounts of profits.

Zoom out and look at the bigger picture of what is happening across the world,the transfer of wealth makes 2004 look like a walk in the park.

Although I do not,I can charge what ever I want and people will still pay it because in this point in time they have no choice,the chips would be no different,it has little to do with supply and demand,money pretty much has no value at this point but it is unsubstantial and in a few months it will be time to pay the piper.

I would think that they may be positioning now,not for what is happening today but for what is coming up,at that time they will have stockpiled while everybody else gets wiped out.Then they will control because nobody will have a choice at any price and they will be the only game.

You need chips for the current agenda of climate change,they screwed up when they set the deadlines instead of slowly integrating systems,in order for the politicians to save face and meet those deadlines it will not matter what the cost of the chips are,it is not their money anyways so they will have no problem paying $5000 for a $100 chip.

I think they are taking the long approach verses the here and now,much more profit in the future if you are in a position to control it.

When you start seeing these 3 - 4 - 5 trillion dollar packages coming out of the White House why would you even want to mess around supplying chips to the piss ant public or auto manufacturers,the real money is in the government contracts.

But you have to have the product in a large quantity and be able to hand it over now,kinda hard to do if you wasted it on a false pent up demand at chump change competitive prices.

The real question is,GM and others have already run massive campaigns and publicly stated what their future commitments are,they need those chips,so how much are they really ready to pay for them when they cannot get them anywhere else and if they do not purchase them,can they really ever recover from the fallout crashing stock and the public humiliation of not meeting those commitments.

They are not desperate now but they will be,like Warren buffet says,when there is blood in the streets,you will see the most profit.

[Meddle]

Y'all need to quit with the monkey juice.

Not too many years ago, virtually the ONLY things that had computer chips were ... wait for it ...... computers.


Today, virtually everything you buy [even light bulbs] have chips and some items have dozens of them.

Simple supply and demand.

[Richard]

The only thing that has changed on the demand side was the trillions that are going to funneled into green posing as infrastructure.

BC [[before Covid) the supply was keeping up with the demand,what has increased the demand is politics and a friendly green administration.

Not to go all politics.

But that is the way it works.

So what happens next is we will be paying high prices for crap products,but at those prices it would be feasible to produce them in this county,but I am thinking it will just make foreign companies millions as Americans fall deeper into the abiss.

The only way demand increased was the commitment to add another layer of demand and a pot of gold at the end of the rainbow always helps.

3/4 of the stuff that they have jacked the prices up over 400%,was already sitting on the self from last year.

I use refrigerant for commercial equipment,it went from $139 to $360 over night,propane gas valves that were $121 went to $460 the same exact valves that have been sitting on the shelf for the last year.

It has nothing to do with demand.But it is different levels,some prices are being jacked up because of free money has no value and others are holding out for the real money in the fall.

In Venezuela it takes a shopping bag of currency to buy a loaf of bread,we are close to that.

People around me are paying 100,000k over asking price for houses,cash,no inspections no,due diligence,it has nothing to do with supply and demand,the numbers do not meen anything that is realistic.

I have a friend that bought vacant 10 acres for 35,000 2 years ago,sold it for $460,000

I was under contract for 15 acres that had 2 houses on it that needed to be rehabilitated for $229,000,that was its true value,1 day before closing somebody dumped $600,000 cash in her lap,she paid me 100k to walk away,I should have sued her but who needs the hassle.

Point is the numbers and cost of things are high, but it is just numbers that really are not based on true values,if it continues like this,1/2 of this country is screwed.

All the people that fought for 15 per hour,it will get them nowhere because everything else around them has increased over 100% if not more.

The instant gratification of I want it now is reverting back to the old days,you did not buy a new car,you fixed your old one when it broke down,you saved until you could afford that new couch,people with extra bedrooms rented them out to pay the bills,the ride is over for awhile but I guess the silver lining is we do not have to deal with mean tweets anymore because living in poverty and eating dirt is so much more peaceful.

[Jimaz]

Why the Global Chip Shortage Is Hard to Overcome | WSJ

A global chip shortage is affecting how quickly we can drive a car off the lot or buy a new laptop. WSJ visits a fabrication plant in Singapore to see the complex process of chip making and how one manufacturer is trying to overcome the shortage....

From that I gather that the industry simply lacks the resiliency to adjust to economic disruptions on the scale of a pandemic. Chips don't have a short shelf life so warehousing could have buffered that shock. Once again, the savings of a "just in time inventory" comes with a price.

[Richard]

^ years ago I offered to set up a warehouse system in Detroit in order for the manufacturers to have a buffer for just in time.

They laughed at me,but yet they post media releases of the millions they are losing when the chain is disrupted,they look at when there is a shortage it increases demand,which drives prices and profits up.

The last time we saw an interruption was when the wave hit Japan.

The top guy in the county today said the increased costs for food was because of the port in Cali,the answer was not increase production of our own food supply,it was send the port more money to make it easier to import more foods.

It seems like everybody does everything in their power in order to decrease production in this country and rely on imports,I guess people are figuring out how expensive that is in so many ways about now.

[Rocket]

I have some insight.

The problem isn't even at it's worst yet. Few more months to get to the bottom,.. then a year or more to climb out.

The issue for cars at least is that auto manufacturers don't jump on the latest band-wagon. They must make certain whatever chip tech they are going to use is well proven, and won't fail after a year or two That might be acceptable in cell-phones for instance, where computing power v.s size is critical, and simultaneously, users don't usually keep their phones more than a couple of years.

Cars on the other hand don't need the most powerful, and tiniest chips, so being on the cutting edge isn't important. But, users DO expect their cars dashboards to work for more than 3 years. 10 minimum. Preferably 20+.

So instead of 7 nano-meter chips like phones might use, cars still use 90 nano-meter chips [MUCH larger].

Chip manufacturers aren't ending production or anything, but they're also not going to invest huge bux to increase production temporarily for for just one industry.

The head if Intel was quoted at a recent trade show saying they're able to make all the 16 nano-meter chips the autos could handle.

[Jimaz]

I have some insight....

The head [of] Intel was quoted at a recent trade show saying they're able to make all the 16 nano-meter chips the autos could handle.

Rocket, thanks for "chipping" in. That all made sense until the final sentence.

Does that mean that Intel can supply what auto manufacturers need or something other than what auto manufacturers need?

---

Early in the chip shortage one explanation for the phenomenon was that auto manufacturers had cancelled chip orders for some legitimate reason. Then when Covid hit, the fabs got whipsawed into making chips for laptops and Zoom cameras for the work-at-home crowd and it's just not easy to "retool" such a complex process.

We all know it's a big, slow, necessary nuisance to retool an auto plant but really, how hard is it to retool an automated fab? Download some different mask files and programs and switch some chemical feeds? The two retooling processes are not comparable. In fact, I'd argue that the reason they were able to switch to laptop and camera chips so quickly was because it's so easy.

Now that we again need chips for vehicles, it's a slow process.

Maybe they're downloading those masks over a 110 baud modem.

Something's fishy.

[Gistok]

Thanks Jimaz and Rocket for the insight...

Richard... you love typing... Although I totally agree with how nice it would be if cars were simpler again... back to when all you needed was a screwdriver and some carburetor cleaner...

[jcole]

This damned chip shortage affects more things than I ever dreamed of. The library I work at was unable to allow patrons to print things themselves for over 2 weeks while we waited for a cyan toner cartridge and then a drum kit for our laser printers. They all use chips. It was a major PITA for the front desk folks to have to load all print jobs to thumb drives and print from the working printer in the back room

[Jimaz]

Secretive Giant TSMC’s $100 Billion Plan To Fix The Chip Shortage

Taiwan Semiconductor Manufacturing Company makes 24% of all the world's chips, and 92% of the most advanced ones found in today's iPhones, fighter jets and supercomputers. Now TSMC is building America's first 5-nanometer fabrication plant, hoping to reverse a decades-long trend of the U.S. losing chip manufacturing to Asia. CNBC got an exclusive tour of the $12 billion fab that will start production in 2024.

[Gistok]

^^ Jcole... funny you mention print cartridge... I was just thinking of my bank DEBIT card... which has an early 2022 expiration date. Without a card with a chip to replace it... then what?? I suppose the bank can extend the card usage... but many times if you use it online, you are asked the expiration date...

Ditto for chip encased credit cards...

[Rocket]

Rocket, thanks for "chipping" in. That all made sense until the final sentence.

Does that mean that Intel can supply what auto manufacturers need or something other than what auto manufacturers need?

---

Other than.

The head if Intel was quoted at a recent trade show saying they're able to make all the 16 nano-meter chips the autos could handle.

But autos use 90 nanometer chips mostly.

And most of this is for the infotainment systems.

Reminds me of submarines. Go in one from 10 years ago and you'd think they were built in the 1960's. They don't put much of anything in there that hasn''t been proven for decades.

[Jimaz]

Other than.

The head if Intel was quoted at a recent trade show saying they're able to make all the 16 nano-meter chips the autos could handle.

But autos use 90 nanometer chips mostly.

And most of this is for the infotainment systems.

Reminds me of submarines. Go in one from 10 years ago and you'd think they were built in the 1960's. They don't put much of anything in there that hasn''t been proven for decades.

Ah, yes. Thanks for clearing that up.

Yes. Another example of that is aviation. They choose to stay with old, proven technology because the consequences of failure are so costly.

[jackie5275]

^^ Jcole... funny you mention print cartridge... I was just thinking of my bank DEBIT card... which has an early 2022 expiration date. Without a card with a chip to replace it... then what?? I suppose the bank can extend the card usage... but many times if you use it online, you are asked the expiration date...

Ditto for chip encased credit cards...

All my debit & credit cards still have the magnetic swipe strip in addition to the chip. Most card readers have both chip & swipe options. Using the swipe again might be the contingency process.

[Jimaz]

This recent video doesn't claim to be relevant to the chip shortage but it does reveal some of the surprising geopolitical aspects of the industry.

The Entire World Relies on a Machine Made by ONE Company

[Jimaz]

I heard an interesting story on the radio about why there are still so many empty shelves in the stores.

They said that retailers are holding back orders because wholesalers have jacked up their prices too high. Retailers believe they won't be able to move the merchandise at those prices {plus their margin}. They don't want to just warehouse goods on their shelves that no one can afford to buy.

It seems each side is playing a game of chicken waiting for the other side to cave. It will be interesting to see how it all plays out.

This might be an opportunity for homegrown craft industries to get a foot in the door and take back some of the market from the corporations.

[Jimaz]

America’s Big Chipmaking Blunder

ASML is behind what’s arguably the most important technology in the world right now: extreme ultraviolet lithography machines. Without these $200 million EUV machines and the semiconductors they make, there’d be no artificial intelligence revolution and the global economy would begin to slow. While the machines made in the Netherlands are sold mostly to companies in Taiwan and South Korea – TSMC and Samsung – Intel was very late to the game. The US government meanwhile under both Donald Trump and Joe Biden has been scrambling to ensure none of the machines are sold to China.

Chapters:

• 00:00 Introduction
  
• 00:50 What is extreme ultraviolet lithography?
  
• 03:02 Early research in the United States
  
• 04:44 Intel’s strategic mistake
  
• 05:36 Huawei sparks China worries
  
• 07:00 The CHIPS Act and US recovery

What will archaeologists of the distant future be able to discover about us by analyzing remnants of these EUV machines? Our fascination with the Antikythera mechanism comes to mind.