As the chip shortage crisis continues to ferment, who will benefit the most? Who can only "blame themselves for bad luck"?

The global shortage of chips for sectors such as large data centers, automobiles and digital devices has disrupted global manufacturing and is not expected to end soon. However, this shortage is not uniform, as different parts of the chip industry will continue to be affected in different ways.

As the industry enters 2020, high demand is expected in the mobile chip sector due to the launch of 5G devices. When the new coronavirus became a global pandemic in 2020, millions or even billions of people around the world were forced to stay at home to work, study, entertain and socialize, and digital transformation was further accelerated. Demand for chips used in laptops, gaming devices and Internet infrastructure soared.

With demand remaining high and no increase in chip production capacity expected in the short term, the shortage is expected to continue until at least next year.

That's good news for chip stocks. The PHLX Semiconductor Sector Index has risen 92% in the past 12 months. By comparison, the S&P 500 has risen just 50% in the past 12 months, while the tech-heavy Nasdaq Composite has risen 65%.

Eventually, though, the supply-demand imbalance will be resolved, and investors will want to watch upcoming earnings reports and forecasts for signs of reduced demand or increased supply. As the new earnings season begins, different parts of the semiconductor industry may respond differently to shortages.

The chip shortage has had the worst impact on the automotive industry: key components used to produce cars and trucks are unavailable, causing automakers to halt production.

Ford Motor Co. said in late March that it would shut down production at more plants due to a lack of automotive chips, after cutting production of its F-150 pickup trucks in February. Several other automakers have also been affected to varying degrees by the shortage of automotive chips.

Stacy Rasgon, an analyst at market research firm Bernstein, said in an interview that the automotive industry is a vivid example of how chip supply disruptions can affect other industries.

“The automotive supply chain has been hit the hardest due to COVID-19,” he added.

Rasgon also said that after the outbreak of the COVID-19 pandemic, automakers canceled all chip orders due to the decline in automobile demand. When demand recovered, automakers tried to reorder the products they canceled, but because the factories that produced the chips they needed were busy producing high-demand parts for other industries, they could only "consider themselves unlucky."

In addition to the coronavirus pandemic, recent snowstorms in Texas further disrupted supply chains, and automakers typically do not have much inventory of electronics.

Glenn O’Donnell, research director at Forrester Research, noted that “we’re going to see some fundamental changes in supply chain management as a result of what happened last year.”

Maribel Lopez, principal analyst at Lopez Research, said many product designs that rely on electronic components often take months or years to develop and are vulnerable to "hacks" because you can't simply replace parts.

Lopez further explained, “If you look at the F-150, it’s a very expensive truck, but it can be held up by a part that’s $50, $60 or even less. In some cases, our customers have very expensive products that cost, like, $1,200, but are held up by a 3-cent part.”

Recently, Intel Corp. told U.S. media that it is in talks with companies that design chips for automakers to start producing chips for them and solve supply shortages. Intel plans to release its financial report on April 22.

PC sales have received a huge boost as the world has struggled to adapt to working and studying from home due to the coronavirus pandemic. Research firm IDC expects sales to grow 18% in 2021, to 357.4 million units, after growing nearly 13% in 2020.

“PC demand has been exceptionally strong,” Rasgon said, adding that IDC’s estimate of PC shipments is higher than the highest level in a year and exceeds the record of 352.4 million units set in 2011. “So the big debate is how long this demand will last and how much of it is sustainable,” he said.

Citing a personal example, Rasgon said he bought four laptops last year due to the coronavirus pandemic, and he believes business and consumer PC purchases will be similar or above normal in 2020. Although IDC predicts continued growth in PC sales in 2021, many are skeptical that demand has been met.

“I probably won’t buy any PCs for a while,” he added.

Still, the maker of CPUs, or central processing units, stands to benefit in a market increasingly dominated by Intel and Advanced Micro Devices, which has gradually taken market share from larger rival Intel. It also competes with larger rival Nvidia in the GPU (graphics processing unit) space.

Rasgon表示，英伟达和AMD都受益于“大规模供应限制”，因为过去一年游戏芯片产量显著提高，以及新游戏机的出现和对加密货币挖矿的新兴趣。由于这些都是需求较高的高价产品，因此它们对于代工厂来说是最有利可图的，因此可以优先订购。

Smartphones have also been hit by supply shortages, with major supplier Qualcomm recently saying it would have sold more units if not for supply constraints.

However, smartphone vendors may not get as many favorable terms as some other chip companies, Rasgon said, adding that "the smartphone market has been weak for some time. People don't have much demand to upgrade."

One of the biggest recent upgrade drivers for smartphones has been the newly announced 5G standard, but Rasgon said there is "zero demand from consumers for 5G."

He believes that "people will buy 5G phones simply because that's what's on sale."

When chip shortages during the coronavirus pandemic first emerged, wafer fabs around the world were already operating at full capacity and had months-long order backlogs.

This has prompted many fabs to respond by pledging hundreds of billions of dollars in investments to build new equipment. However, this is not only a high investment, but also a long process, taking an average of two years from breaking ground to producing the first wafer.

TSMC, a global foundry, plans to invest up to $100 billion in new fabs over the next three years, while Intel said it plans to spend $20 billion this year to upgrade its fabs and expand into a foundry. TSMC emphasized in its latest earnings report that it will focus on automotive customers and predicts that shortages will ease by the second quarter.

Meanwhile, IC Insights expects Samsung, another major foundry, to maintain capital spending at around $28 billion in 2021, the same as last year.

In addition, the United States has pledged to invest $50 billion to build domestic chip manufacturing infrastructure.

“We are expecting a very aggressive expansion over the next two years, with a lot of capital expenditures,” O’Donnell said. “It’s going to take a while, though, so I think this shortage is going to continue for a long time.”

The big winners in the semiconductor space will be companies that make highly specialized equipment used to build foundries that make chips. These companies include Lam Research, KLA Corp., Applied Materials, ASML, MKS Instruments Inc. and Teradyne Inc. All six stocks, except Teradyne, closed at all-time highs on April 5.

Source: Cailianshe

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