Chips for chipmaking machines are affected by chip shortage

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…


The global chip shortage was created by a mix of factors. These include increased demand for technology during the pandemic, COVID-related production disruption, and a growing demand for chips by car-makers; as cars rely on increasing numbers of microprocessor units.

The biggest issue is not with CPUs and GPUs, but far more mundane chips like display drivers and power management systems. These relatively low-tech chips are used in a huge number of devices, including Apple ones.

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 cannot 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 a pandemic-era aberration of supercharged demand for laptops and other chip-hungry gadgets has spiraled into a structural problem for 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.”

Doug Lefever, chief executive of Advantest America [agreed, saying that] typical lead times on his company’s machines, which test whether newly made chips function correctly, have doubled or more. “I think we’re in it for quite a while before we get completely back to standard lead times,” 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 is now 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 are among those calling for this approach to be more widely adopted.

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

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