Keesjan Engelen provides his insights on some of the latest electronics industry developments and its impact on Asia's electronics manufacturing scene.
Component shortages are getting increasingly serious and ICs are the new toilet paper. Voltage regulators that normally cost 50 cents have been selling for as much as $70. IC prices hiked up by 10x and lead times up to 52 weeks are not uncommon.
Key contributing factors to how we got here:
Lower end ICs such as power management and microcontroller chips are experiencing the longest lead times as they are susceptible to both stockpiling and de-prioritization of capital allocation due to thinner margins. Many factories now have half their design staff dedicated to finding, and redesigning for, replacement components.
If you need anything manufactured this year, you better—try to—order your silicon now.
In the last three years, TSMC has bought 43 Extreme Ultraviolet devices (EUVs) from ASML. For 2021 to 2023, another 92 are ordered. This accounts for 60% of total EUVs produced against rival buyers Samsung Electronics and Intel Corp.
What can be an emerging problem is that the new EUVs use an astonishing 20 TIMES as much energy as the previous generation. TSMC’s fabs already account for 5% of Taiwan’s total energy usage. With two blackouts to have happened this year, it is questionable whether we have enough output to sustain their growing activities. Perhaps building some fabs outside Taiwan is not such a bad idea after all.
Besides power, TSMC also uses 156 million liters of water every day. In Taiwan, they already have a water supply problem, and immense efforts to recycle and reuse ultrapure water is a necessary part of long-term strategy.
In addition to energy and water, the other major shortage is talent. Talent shortage and poaching has gotten so bad domestically that the Taiwan government has actually forbidden headhunters to list mainland China positions.
For its new Phoenix fab, TSMC recruited 250 employees from Arizona, of which 100 engineers, including their families, had to be sent to Tainan for an 18-month training program. The training, alongside higher labor costs in the US, may be obstacles to overcome for the success of the new fab.
For the other industry players, some are starting to feel the negative impact of the shortage while others have managed to come out on top. Lens maker Largan reported that its sales went down by 27% year-on-year (YoY) for April. Meanwhile, Acer reported sales growth of 26% YoY and ChipMOS, an IC assembly and testing services, reported an increase of 23% YoY.
About the Author
Keesjan Engelen is the CEO of Titoma, a mid-sized ODM firm for embedded electronics headquartered in Taiwan. Keesjan has been working in electronics in Taiwan and China for 25 years, and frequently writes about design for manufacturing in Asia. He emphasizes incorporating China components very early on in the design process, without getting yourself locked in.