According to SCMP, many chip manufacturers in Taiwan, South Korea, and the US are stepping up chip production to meet the huge market demand due to the impact of the Covid-19 pandemic.
However, ramping up chip production on a large scale is also risky, raising concerns that the semiconductor industry will have a chip surplus in the near future. Once demand declines, many firms’ profits will plummet.
US chipmaker Texas Instruments warned that third-quarter revenue may fall short of analysts’ expectations. The company forecasts revenue will reach $4.4 billion to $4.76 billion through the end of September. Analysts’ previous forecast was $4.59 billion.
Texas Instruments’ revenue rose 41% in the second quarter thanks to strong demand for electronic devices. However, it is quite surprising when the company has a negative forecast in the last quarters of the year.
This is actually not too difficult to understand when the management of Texas Instruments warns that it is impossible to predict in advance whether demand will peak anytime soon and whether current chip sales growth will be sustainable.
Texas Instruments CFO Rafael Lizardi shared in an interview: “Our job is not to predict the future but to prepare for all possible scenarios.”
Perhaps it is because of the rapid growth rate that has created skepticism among analysts and investors.
According to research from financial group Susquehanna, the gap between semiconductor ordering and delivery time increased to 19.3 weeks in June, which is a week and a half longer than in May. longest wait since the company started tracking the data in 2017, which is five weeks longer than the previous peak in 2018.
Now the chip industry is stepping up investment in production lines and factories to meet the growing demand for chips.
The world’s leading semiconductor manufacturer TSMC has committed to invest $100 billion over the next three years to meet market demand. The company is currently planning to build an open factory in the US and Japan. TSMC CC CEO. Wei expects the company’s capacity to maintain through this year and into 2022.
Meanwhile, two Korean semiconductor firms, Samsung Electronics and SK Hynix, are expected to spend about $442 billion on research and production of semiconductors between now and 2030.
This week, leading equipment supplier for chipmaking ASML Holding said that orders for high-end semiconductor manufacturing machines had increased to a record. The company’s main customers, TSMC and Samsung, are stepping up buying lines to increase production capacity. However, the line can only be completed from now until at least next year.
ASML CEO Peter Wennink said that efforts by some governments to build chip capacity in the country will contribute to an increase in orders for semiconductor manufacturing equipment.
According to experts’ predictions, the chip shortage could improve as early as 2022 after manufacturers find a way to improve chip output.
Refer to SCMP
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