Tech

TSMC Chairman Claims Some Companies Sit In Chip Warehouses

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Why is it important: In the past year, the technology supply chain has gradually deteriorated to the point where relentless demand and a host of other elements have made it nearly impossible for industry players to catch up on the supply side. There are many factors that have led to this situation, but one that has recently come into focus is that some companies are stockpiling chips without considering the negative impact of this practice on the industry as a whole.

It all started with a chip shortage that exposed a weakness in the global supply chain – a heavy reliance on China and its neighbors for much of the world’s manufacturing capacity for a variety of consumer and industrial products. At one point, manufacturers such as Foxconn condemned the situation and called on governments and companies for a concerted effort to develop a supply chain that is more resilient in the face of trade wars and major crises.

However, the situation is much more complicated. Chip factories such as Samsung and TSMC are operating at full capacity, but despite their best efforts, the most optimistic timetable for supply catching up with demand is still 2022-2023. TSMC Chairman Mark Liu said TIME Magazine reports that the company is doing its best to serve all of its customers and has denied claims that TSMC prioritizes one customer over another.

Liu says automakers were quick to point to chipmakers for $ 210 billion in losses this year, but it’s hard to pinpoint exactly what the problem is. First, auto makers cut production and cut orders for chips in February, only to face a surge in demand for their cars a few weeks after. At the same time, TSMC redistributed part of its capacity for clients, which, as it seemed to it, was lacking.

The move did not like automakers and several other companies, but Liu said the likely explanation for the complaints is that distributors and resellers are hoarding chips. Despite the popular belief that TSMC serves Apple more than anyone else, in fact, the company was forced to postpone orders for high-value customers who were believed to have sufficient inventory to meet their immediate needs in order to serve other customers. who needed it. chips to stay afloat.

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It’s not hard to imagine where this happens most often. At one point, Huawei spent billions building up a two-year stock of US chips to stay afloat amid growing trade tensions between China and the United States. Other Chinese companies are pursuing a similar strategy, but no one knows exactly how many chips they have amassed over the past year. What we do know is that China imported a record $ 35.9 billion in semiconductors in March alone to protect its local industry from US sanctions or other sources of abuse.

Liu notes the ongoing spit between the two countries is not beneficial to anyone and creates ideal conditions for the current chaos in the global technology supply chain. TSMC’s customers sign contracts for chip production ahead of time, and the current political climate is forcing them to take desperate measures that further exacerbate chip shortages.

The semiconductor industry also faced a shortage of skilled workers, as well as skyrocketing prices for raw materials such as silicon and rare earths. If anything, it looks like solving the ongoing chip shortage depends on the ability of foundries like TSMC, Samsung and Intel to expand global manufacturing capacity, but also on governments. play a big role how the industry is managing this process.


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