Semiconductor mature process capacity is overwhelmed, and seven major electronic components are in short supply

The production capacity of mature semiconductor wafer processes is overwhelmed. Overall, there is a shortage of seven major components, including microcontrollers (MCUs), filters, panel driver chips, power components and power management chips, timing controllers, sensor components, and passive components. The shortage of semiconductor raw materials and key components also causes problems of supply and demand.

This made the upstream wafer foundries happy, but the midstream module manufacturers were under heavy pressure. Downstream manufacturers of consumer electronics including laptops, mobile phones, as well as automobile and electric vehicle manufacturers had concerns about shipments, creating a special situation in the electronic information and communications industry where the top is fat and the bottom is thin.

Zeng Ruiyu, director of industry research at the Semiconductor Industry Association (SEMI), pointed out that there is a shortage of production capacity for mature and advanced processes in wafer fabs, including automotive, network and Wi-Fi, graphics processors, microcontrollers (MCUs), power and discrete components, panel driver chips, etc., which continue to be in short supply. He expects that the tight capacity of wafer fabs will continue, especially for 8-inch wafer fabs, and the supply restrictions on automotive chips will continue until next year.

Industry insiders said that the increase in automotive electronics and electric vehicle penetration has led to a significant increase in the demand for automotive electronics. Key automotive electronics, including microcontrollers, CMOS image sensors (CIS), power management ICs, touch ICs and other components, mostly use mature 8-inch wafer fab processes. In addition, panel driver ICs and CIS sensing components, which are widely used in consumer electronic products such as mobile phones and televisions, are also mostly manufactured using mature 8-inch processes. The production capacity of 8-inch wafer fabs has long been in short supply.

In addition to components such as timing controllers (TCON), panel driver and touch integrated single chip (TDDI), mid-to-high-end microcontrollers, etc., 12-inch wafer fabs are highly adopted, including mature processes such as 65nm, 40nm, and 28nm; and applications such as high-performance computing (HPC) and artificial intelligence Internet of Things (AIoT) required for 5G mobile phones and base stations, servers and data centers have driven the demand for high-end processors and system-on-chip (SoC), and also filled up the 12-inch advanced process production capacity of wafer foundries.

Dell, a major laptop and computer brand, pointed out that the supply of clock controllers, microcontrollers, power chips and panel driver ICs are still challenging. Dell did not shy away from pointing out that it is still limited by the shortage of some key components and expects that component prices in the third and fourth quarters will still show inflationary trends.

Foxconn Chairman Liu Yangwei also pointed out that the global shortage of chips and components is mainly due to the tight supply of mature semiconductor process components; in addition, the expansion of the COVID-19 epidemic in Asia will have an impact on the global information and communications industry supply chain.

Compal Chairman Hsu Sheng-hsiung said that the material shortage problem is indeed troubling the business community. If the component supply situation can be alleviated by the end of this year, attention should still be paid to how to avoid the problem of long or short materials that may lead to an increase in scrap.

Tom Caulfield, CEO of wafer foundry Global Foundries, pointed out that the current shortage of semiconductor chips has deeply affected the global industry, and the production capacity of the semiconductor manufacturing industry must be expanded at an accelerated pace to meet market demand.

Dell did not shy away from pointing out that the semiconductor industry needs more production capacity, but production capacity continues to be limited, especially for the mid-level process (trailing node), most of which come from 8-inch wafer manufacturing. The key components continue to be tight, and the investment in 8-inch wafer fabs is also relatively limited. It is expected that the tight situation of key components for the mid-level process will continue until next year. Despite this, Dell still has no plans to enter the semiconductor field.

Structural factors are one of the main reasons for the shortage of semiconductor production capacity. Industry insiders said that the selling price of 12-inch advanced process can support the initial cost of building a new factory, but building a new factory with 8-inch and mature 12-inch wafer process will result in losses, which affects manufacturers' willingness to build new factories. Therefore, the market capacity increase is limited, which also aggravates the shortage of materials in the semiconductor supply chain.

Semiconductor material shortages and material length and short supply problems have affected the shipment performance of midstream module factories. Xu Wenyi, chairman of Hon Hai Group's indirect investment system module packaging factory Xunxin-KY, said that module shipments have been affected by the global shortage of semiconductor chips and passive components.

The second half of the year is generally the peak season for consumer electronics products. However, Xunxin-KY pointed out that due to the impact of the epidemic, the shortage of semiconductor chips and passive components is quite serious, and it is estimated that the shortage situation will not be alleviated this year.

Lu Shaoping, general manager of semiconductor assembly plant Tong Hsing Electronics, pointed out that the epidemic situation in Malaysia and Vietnam is still uncertain. For example, the epidemic in Malaysia has had some impact on some ceramic substrate and hybrid integrated circuit module customers in August. Lu Shaoping said that due to the epidemic interfering with transportation, material shortages are indeed a headache, and Tong Hsing Electronics has responded by dispersing raw material suppliers.

Taiwan's packaging and testing supply chain manufacturers have also felt the severe shortage of materials. Huang Shui-ke, general manager of test interface manufacturer Chunghwa Precision Testing, pointed out that the shortage of semiconductor materials has indeed been affected by the epidemic. Coupled with the resurgence of the Delta virus epidemic, he estimates that the shortage situation will not be resolved until next year.

Zheng Shijie, chairman of Nanmao, a panel driver chip and memory packaging and testing factory, said that the supply of panel driver IC wafers is not smooth, the short-term wafer supply is tight and there is no sign of relief, and the delivery time of memory materials is also extended.

Zeng Ruiyu pointed out that the supply of wire bonding packaging, IC substrates, lead frames, epoxy resin molding materials, etc. for semiconductor back-end packaging and testing is also very tight.

The shortage of semiconductor chips has also led to a shortage of semiconductor process equipment. According to a research report by Korean media The Elec, as of July, the delivery time of ASML's ArF photoresist equipment has been extended to 24 months, the delivery time of I-line scanners and extreme ultraviolet exposure equipment has been extended to 18 months, and the delivery time of 8-inch wafer equipment has been extended to 13 months to 14 months.

Zeng Ruiyu pointed out that the shortage of semiconductor raw materials and key components may also affect the growth trend of the global semiconductor market. The extended equipment delivery time may affect capital expenditure planning. For example, the materials required for wafer fabs include silicon wafers, photoresists, and materials required for wet chemical methods. The supply is very tight, and it is estimated that the wafer supply will continue to be in short supply in the next few quarters.