In short: Manufacturers of equipment for the semiconductor industry are reluctant to increase capacity, even as the world’s largest chip makers are trying to expand their operations. Even if they did, persistent shortages of basic materials and components would severely limit their ability to deliver more equipment on time.
Chip makers such as TSMC, Samsung and Intel are pouring billions into their ambitious expansion plans. The semiconductor industry has struggled to adjust to the surge in demand for anything silicon-based, prompting foundries to invest in building additional plants in different regions in hopes of catching up.
In addition, the silicon giants have been looking for ways to diversify their supply chains in the face of geopolitical and pandemic-related uncertainty. Meanwhile, the rising costs of materials and gases needed in the chip manufacturing process have further complicated the supply chain, which is highly concentrated in a few countries and thus prone to major disruptions to overall production.
In addition to these problems, there is an even bigger problem that could have a significant impact on the expansion plans of all chip manufacturers.
According to the Nikkei reportSpecialty chip tool makers such as ASML, Lam Research, Applied Materials and KLA warned their customers this week that they may have to wait up to 18 months to receive critical equipment.
The main reason is the lack of everything from engineering plastics to microcontrollers, precision lenses, pumps, valves, special cables, sensors and more. It is also worth noting that lithographic machines are among the most advanced in the world. For example, a single EUV lithography machine made by ASML requires over 100,000 components from nearly 800 global suppliers and costs up to $200 million, so it’s not exactly a mass commodity – far from it, in fact.
ASML says 96 percent of the machines it has ever sold are still running, and the company regularly upgrades some of its older deep-UV systems for use on mature process nodes. The company is forecasting a 20 percent increase in sales this year, but that doesn’t mean it can significantly speed up production of its much-demanded wafer etching equipment.
U.S. chip packaging and test equipment maker KLA is also suffering from ongoing supply chain problems, with wait times for some of its products now stretching to more than 20 months. Unimicron, the world’s largest chip wafer maker, says delivery times for equipment it badly needs are now up to 30 months, up from 12 to 18 months last year.
Further exacerbating supply chain problems is a shortage of skilled workers that keeps chip makers and electronic components makers hiring. And if that wasn’t enough, there are signs of consumer electronics demand slowing down, which is already pushing up production costs.