Who took my chips, from the IET’s E&T magazine

25th February 2021 | News

Mark Lapedus of trade newspaper Electronics Buyers News reports: “Taiwan Semiconductor Manufacturing Co Ltd (TSMC) is telling customers that they must sign a three-year lump-sum contract to guarantee capacity….TSMC’s move, which has been greeted coolly by some customers, comes at a time when IC makers are scrambling for more wafer capacity. They may be left with no choice but to strengthen their ties with the Taiwanese company.”

There’s nothing like a shortage to get customers scrambling to tie up long-term deals when previously they were all about just-in-time delivery. However, Lapedus’ report is not from recent weeks, when carmakers have complained to local politicians who in turn complained to the Taiwanese government who promised to get right on that to TSMC management. It’s from July 1995, a distant time when certain chips were as hard to find as a Buzz Lightyear toy and the customers for silicon then were not really big enough to demand a response from their governments. Chips these days are serious business, especially if you’re in a business politicians care about.

However, a little over a year later, analyst firm Advanced Forecasting described how monthly sales had dropped by a quarter from $12bn per month to $9bn. The reason? A dramatic build-up of production capacity driven by the earlier shortages that had suddenly translated into a glut, even as the first internet boom was getting under way. The semiconductor industry never looked back: and not in a good way.

To continue reading go to E&T online https://eandt.theiet.org/content/articles/2021/02/carmakers-get-a-painful-lesson-in-supply-and-demand-from-the-chip-industry/

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