Gartner: Chip overcapacity may occur in 2023

According to Alan Priestley, an analyst at information industry consultant Gartner, the current global chip shortage may be reversed in 2023, but overcapacity will occur afterwards. The main reason is that since the outbreak of the new crown epidemic, semiconductor companies have expanded their factories on a large scale.

Priestley stressed that the characteristics of the semiconductor industry are that once the supply and demand of chips are in balance, the industry will start to invest in preparation for the next wave of demand. However, the current chip shortage is so serious because of insufficient investment in production capacity in some areas and the surge in demand for electronic devices for work and study caused by the new crown epidemic.

Different products such as electronic devices, consumer electronics, and automotive chips use different chips, and the production processes are also different. For example, processors or high-speed computing chips in electronic devices require advanced processes, while power management chips only require general processes. The production lines of different chips cannot be switched arbitrarily. When production capacity is in short supply, chips with relatively simple processes are usually less likely to obtain production capacity due to lower profits. Therefore, it is common for automobiles or electronic products to stop production due to a shortage of simple components.

In addition, a wafer fab cannot be built within a few months, and a 7nm wafer fab cannot be easily converted to a 5nm wafer fab. Priestley said that the main bottleneck of advanced processes is the shortage of exposure machines. Since advanced processes below 5nm must use EUV exposure machines, only ASML is currently able to supply them, and the company's production capacity is also facing the dilemma of insufficient supply.

Another problem for the semiconductor industry comes from the Russian-Ukrainian war. Neon gas is a byproduct of steel production and a key raw material in the semiconductor process. It is used in deep ultraviolet (DUV) and extreme ultraviolet (EUV) exposure equipment required for lithography. After the Russian-Ukrainian war broke out, the local gas purification plant in Ukraine has suspended operations. The supply of neon gas has been further aggravated by the recent Russian bombing of the Azov Steel Plant in Malibo.