27 ms·

The chip shortage keeps getting worse – why can't we just make more?

409 points by hhs 5y ago

amelius 5y ago
Yes. Designing boards around the shortage is quickly becoming a new artform.
- toomuchtodo 5y ago
  Resiliency and degrading gracefully is beauty.
- mrfusion 5y ago
  Any further reading on this? I’d like to understand it more. Are there certain chips that are plentiful that we could port a lot of software over to? (Might be a good business opportunity if so)
  - jbay808 5y ago
    I would guess that the GP means designing such that your board accepts multiple footprints for compatible parts, so that if your first choice of op amp (or voltage regulator, etc) goes out of stock you can populate another one. That might be a similar part by another company, or it might be an identical part in a different package (often ICs are available in two or three package shapes, and you might not be able to predict which ones will be in stock).
  - jmwilson 5y ago
    It basically means order sufficient parts before starting layout or even before finalizing the schematic. It's not just microcontrollers that are scarce, it's also "dumb" ICs like power management, discrete logic, A/D interface, etc.
  - krisoft 5y ago
    > Are there certain chips that are plentiful that we could port a lot of software over to? I sense a potential misunderstanding here: Not every chip runs code. Microcontrollers and processors do, but there are many different kind of chips. Some convert voltages, some massage signals, some drive motors, etc. Why is this important? Porting code will only help you when you are swapping microcontrollers or processors. Which is just a tinny sliver of all the ICs in use. Porting code won't get you anywhere if what you are missing from your BOM is a boost-buck IC, or an opamp.
  - asdff 5y ago
    Time to start building clusters out of salvaged pentiums
- joncrane 5y ago
  Wasn't Wozniak an absolute wizard at minimizing chip count on circuit boards? What used to be a lost art is turning into one of the hottest skills around.
  - dvh 5y ago
    https://en.wikipedia.org/wiki/Muntzing https://en.wikipedia.org/wiki/Muntzing
    - quickthrower2 5y ago
      Deserves a HN submission of its own!
butz 5y ago
How about using old hardware for longer and building optimized software that performs great even on old hardware?
- fny 5y ago
  This isn’t about computers. It’s about all the other things that have chips in them. Look up SiC chips in particular, they’re in everything.
  - PeterisP 5y ago
    The simple things with chips in them don't (or shouldn't) have the expected growth of computing power that makes parts obsolete. Like, if a washing machine or a car's fuel injector needs some chips, we should be able to reuse chips from older washing machines and older fuel injectors which we generally throw out because of a mechanical failure with all their electronics intact, but currently it seems that all these chips get just discarded, no one cares about them.
    - Gigachad 5y ago
      It would seem exceedingly difficult to reuse chips at scale. The software and pcb is deigned around one microcontroller in particular and it is not trivial to swap them out with others. So if I design my washing machine around a particular chip, I could order a million of them for 5 cent each, or I would have to: * somehow identify other models which have the chip * find 1 million of them about to be discarded * rip them open, desolder, collect these parts * discard the rest of the machine * do this for about 10 cents per washing machine combined with the fact that washing machines usually last a decade and will be dying out over a time period spread out over 10-20 years after manufacturing time. How on earth would it be possible to pull off and by that time, these chips will be very obsolete / impossible to order new ones.
      - ant6n 5y ago
        How about creating the standard for a small set of some sort of industrial raspberri pi, with a replacable (or flashable) ROM?
mindvirus 5y ago
This is an interesting article, but it doesn't answer why we have this shortage. Presumably without COVID, companies projected what demand would be for years out and could plan manufacturing capacities. What about COVID caused the shortage? Is it shipping speeds? Change in demand? Less efficiency down the supply chain due to health requirements? Trade changes?
- Bud 5y ago
  You expected an actual useful explanation of a complex tech issue from Bloomberg? The next time Bloomberg manages that will be the first time. Completely, utterly useless for tech reporting of any kind.
  - deleted 5y ago
    [deleted]
- YZF 5y ago
  Nobody knows for sure. It's a complex phenomena. - Blame Toyota with their Just In Time inventory management ideas. - Factory closures, lockdowns, etc. - Increased demand for certain items. Everyone's at home surfing the web, playing games on their computers, mining bitcoin? - Monetary policies are creating excess (see bitcoin mining) demand. - Shipping delays. Ports running at reduced capacity. Ships sitting at sea waiting to get access. Suez Canal blocked. Shipping companies have no spare capacity. Blame Toyota. - Building new factories takes time, getting/building new machinery takes time, everything was set up to not have any over capacity (since that's loss) ... blame Toyota again. - Big companies swallowed everyone so we don't have as much diversity of products as we used to. Probably related to easy money as well. tl;dr Toyota, Greenspan, Covid ... Somewhat in that order. EDIT: Should probably add the trade war between the US and China to that list.
  - Multicomp 5y ago
    > - Blame Toyota with their Just In Time inventory management ideas. Toyota had a stockpile [1] of semiconductors and are only now-ish running into the same supply problems everyone has been since March 2020. [1] https://www.bloomberg.com/news/articles/2021-04-07/how-toyota-s-supply-chain-helped-it-weather-the-chip-shortage https://www.bloomberg.com/news/articles/2021-04-07/how-toyot... > But the Tohoku earthquake’s aftermath pushed Toyota to increase flexibility, and the value of inventory Toyota carries has almost doubled since 2011. Speaking at a briefing in February, Toyota Chief Financial Officer Kenta Kon said as part of the company’s business continuity plans, it keeps as many as four months of stock for some crucial components such as chips. Toyota didn’t expect the semiconductor shortage to disrupt production in the near term, he said.
mrfusion 5y ago
Are there any estimates on when the shortage might be over?
- lvl100 5y ago
  When this run in crypto is finished.
  - mrfusion 5y ago
    I thought crypto was mostly gpu though?
    - Hjfrf 5y ago
      It's mixed. Ethereum is gpu, bitcoin is ASICs, monero is cpu for example. Heavy overlap in raw materials and supply chain regardless.
    - Fordec 5y ago
      GPUs are made from silicon. Other chips are also made from silicon. Manufacturers will use said silicon to make whatever chips make them the most money per manufacturing run. Which, right now, is GPUs.
  - sneak 5y ago
    This is not remotely the basis for the shortage. It is the basis for the high price of GPUs. There are massive shortages at all process node sizes AIUI, not just the cutting edge.
qualudeheart 5y ago
I welcome the chip shortage. I implore the national security state and the intelligence community to take action and intensify this trend. Thus the advance of artificial intelligence will be slowed and we will have more time to practice AI regulation and control. Only then may strong AI be permitted to eventuate. Otherwise it may destroy us. He who develops AI would be punished severely were we to live in a just world. We need a butlerian jihad against AI, led by the national security state, equipped by the brave men and women of Anduril incorporated. The damage to the rest of the economy is unfortunate but a cost I am willing to accept. Now what do we actually need that hardware for, aside from training language models or mining bitcoin? Why don’t we also develop more efficient software? Why don’t we pay people to do so? Many of you in this thread could work on this, and be paid handsomely for it.
- nightfly 5y ago
  What are you afraid AI will do?
  - andrewnicolalde 5y ago
    Perhaps to further what oppressive humans have long wanted but not previously had the capability to do.
    - qualudeheart 5y ago
      Per the orthogonality thesis (Bostrom) I do not even expect AI to have similar moral values to ours. I expect it to instrumentally secure power to better pursue it’s goals, and in the process thereof establish hegemony over us and other AIs. From there it could easily try to kill us. I don’t want any of that. My preferred outcome seems to be what Elon Musk wants, human cyborgs amplified with brain computer interfaces and control over machines; never a machine with control over many humans or posthumans.
  - qualudeheart 5y ago
    The main threat model is a Yudkowskian rapid takeoff where artificial general intelligence recursively self improves far beyond human intelligence, making it like a god with absolute power compared to us. This corresponds to the agentic model of artificial general intelligence put forth by Bostrom. Yudkowskian AGI might fail in the long term since it would run into Gödelian problems it would never be able to solve but infinitely loop on. That humans are immune to those and can behold contradictions testifies to a Penrosian supra-turing-machinic aspect to the human mind. Man has a transcendent aspect even if we may not be meta-cognitively aware of it at all times. AGIs could possibly be destroyed through the use of such problems, akin to magical spells wielded by powerful magi. A secondary threat model of mine is based on a world of non-general, non-agentic strong AI with many discrete “tool AIs” with superhuman ability in one unique area. The secondary model is mostly harmless except for military AI. The genius of Andúril Incorporated lies in their creation of drones designed to destroy other drones. This future is still very dangerous, and I hope that the security state will take action to prevent it’s arrival.
mathverse 5y ago
It's not only chips.It's everything.Timber,iron,steel,building materials, certain types of food. It's the increased consumption of these goods because of insane lockdowns all around the world.People did not spend money on holidays but decided to upgrade their homes and electronics.
- laurent92 5y ago
  Or is it the adolescence of China, once a baby in consumerism, now a hungry teenager engulfing all the calories it can?
  - pphysch 5y ago
    Or is it the ongoing & economically unjustified printing of multiple trillions of USD since 2020, which forces firms globally to move away from money or get ripped off?
- sbierwagen 5y ago
  Lumber peaked back in May at $1,600. It's down to $576 now: https://www.nasdaq.com/market-activity/commodities/lbs https://www.nasdaq.com/market-activity/commodities/lbs
  - imtringued 5y ago
    Oh no hyperdeflation is coming!! I am honestly tired of this. Yes we had a pandemic but we didn't have a war that killed and destroyed the very thing that produces the things that we are short of right now.
- quickthrower2 5y ago
  Why are lockdowns insane for a novel, highly transmittable and deadly and mutating virus for which there was no vaccine and although there is now it is not rolled out enough globally yet.
eande 5y ago
Old article May 5th of this year, which in that industry is a long time. Nevertheless the situation since did actually get worse as predicted. Not only is it chip shortage we should call it component shortage. A standard 10k 0406 package resistor is sold out around the world. Many high quality, high density capacitor you can't get. The same goes for the standard semiconductor parts like diodes, MOSFET or TVS. Semiconductor sales rep give you now +50 weeks lead time for the many ICs meaning no real forecast at this point. They generally tell you 2022 will be tough maybe Q4 will ease up. Many of the major semi companies are running at fairly high capacity, but supporting elements like IC package build capacity, sometimes materials can't keep up as well. We looked at some boards to redesign, but when you are short hundreds of parts it gets nearly insurmountable to manage a hardware redesign. Interesting and challenging allocation period, definitely worse than 2003-2005.
- wereHamster 5y ago
  Is the shortage of common components (such as the 10k 0406 resistor you mention) due to: increased demand that can't be met due to unavailable capacity or because the manufacturers scaled production down during the past year and now there is no capacity to scale it back up? Or because supply chain shortages that feed the fabs (raw materials)?
  - baybal2 5y ago
    Passives are actually quite quick to produce. I think it's a good proof that a few giant distributors in China keep buying, and flushing them down the drain.
    - q-big 5y ago
      > Passives are actually quite quick to produce. I think it's a good proof that a few giant distributors in China keep buying, and flushing them down the drain. What are these immense amounts of passives used for?
      - CompuHacker 5y ago
tpmx 5y ago
I've been wondering: How much of this is caused by component fragmentation? As an example, Digikey lists a staggering 55k separate microcontroller variants (active products): https://www.digikey.com/en/products/filter/embedded-microcontrollers/685?s=N4IgjCBcpgnAHLKoDGUBmBDANgZwKYA0IA9lANogAMIAusQA4AuUIAykwE4CWAdgOYgAviKA https://www.digikey.com/en/products/filter/embedded-microcon...
- YZF 5y ago
  You'd think that would be a positive? Presumably only a very tiny fraction of those are suitable for automotive applications e.g. also presumably some of those were only made in smaller quantities trying to hook some big customer. I think we've always had a pretty large variety of microcontrollers, just something like an 8051 was available in hundreds of options from various companies. Microchip has always had lots of different ones with slightly different options. Sometimes (often?) those are the same die in a different package with some different build time options enabled.
  - tpmx 5y ago
    I'm not following you how on that would be a positive (in a chip shortage situation). Say you use 50 microcontrollers in a car. Probably 15+ separate part numbers? One or two of those can't be acquired, so boards need to be redesigned and the production line is held up. Now, imagine a different world with wide cross-licensing between manufacturers and instead of doing hundreds of separate variants slighly cost optimized for various purposes for each major microcontroller design, let's just have a small number of kitchen sink variants.
    - yjftsjthsd-h 5y ago
      It's a trade-off though, since every one of those controllers will probably be less efficient and more power hungry then more specific parts would have been
      - tpmx 5y ago
buitreVirtual 5y ago
"Former Intel Corp. boss Craig Barrett called his company’s microprocessors the most complicated devices ever made by man." Not very smart to boast about this. So AMD makes more performant chips with less complicated designs?
jml7c5 5y ago
I do wonder how much of this is exacerbated by hoarding. Similar to the Great Toilet Paper Shortage, where fear of continued shortages caused panic buying which caused extended shortfall of supply. And that was in an industry where production was not constrained and warehouses were full!
- 11thEarlOfMar 5y ago
  If we can find availability of any of dozens of parts we are short, CEO orders are to buy out the inventory. Hoarding is a component of the shortage, and may be the both trigger and cause for extending the problem from months to years. Semi companies are buying new equipment at record levels, but even the equipment companies are thrashing to find chips to control their equipment. Analysts may want to keep an eye on balance sheet inventories at electronics manufacturers like Jabil, Flextronix, Fabrinet and their ilk to get an idea of the extent of hoarding in the market.
- intricatedetail 5y ago
  You can buy any chip that is not available from legitimate sources in China in pretty much any quantities. I wonder at this point if this is not a part of hybrid warfare.
- bloggie 5y ago
  I have to imagine there is quite a lot of hoarding going on, but by a different name. Normally I buy components for the next 6 months of expected use. TI sent me an email a couple weeks ago asking me to place orders for the next 18 months of use to guarantee delivery. So there I go placing orders for 3x what I normally buy. But it isn't hoarding, it is guaranteeing allotment. The part brokers have locked in their quantities months ago, also increasing demand. What are you going to do.
mlang23 5y ago
Perfect timing, for once. In 2019, I jumped onto the Sonos train, got rid of a bunch of old hardware, (finally) replaced my desktop with a ThinkPad X1. In early 2020 (before the first lockdown) I completely redid my little "home office", investing in 4 combinable tables, a new 8-channel USB soundcard, a MIDI controller, and some more stuff I should always have had... Two weeks after I managed to clean out the apartment from old tables and stuff, lockdown came. In summer 2020, I finally got the long-overdue replacement for one of our HPC clusters at work. Neitzer at work nor at home do I plan to invest any money into hardware in the next two years. Sure, it might sound easy from where I am to say that, but I find this period of the world a perfect time to do some consume consolidation. Looking back, I surely spent a bit too much on hardware over the last 20 years. Thats fine in the first few years of your career, because after all, those are not just toys, they actually help you acquire knolwedge. However, after a time, it somehow becomes silly. If I am true to myself, there is really nothing I need right now. And I guess that applies to more people then just me.
rossdavidh 5y ago
While it is obviously not unrelated to the pandemic chaos, there is a deeper issue. As Nassim Taleb has often pointed out, the same things that make a system "efficient" also can often be viewed as making it fragile. "Just-in-time" means "no buffer". We have, for decades, been doing as much as possible to make all our economic systems as efficient as possible, which is to say with no extra capacity. Thus, if it had not been the pandemic, it would eventually have been something else. Sooner or later, there is always a shock to the system. If you have made sure that every step in a long complex chain is optimized to have very little slack, the thing you have optimized for is fragility.
- fny 5y ago
  Given you can't predict what the shock will be or its consequences, how are you exactly going to create a buffer? Creating broad redundancies would result in lots and lots of waste both damaging to a bottom line and the environment. Also, is this "fragility" really that big of a problem? Sure, prices are going to move up 20-30% for a year or two until the supply chain issues ease, but is that worth driving up costs for decades preparing for potentially the wrong issue?
  - keoqpkk 5y ago
    We don't really put a price on environmental and societal damage that "just-in-time" does (thinking of truck drivers living on the highway effectively acting as the warehouse, saving the company to build an actual warehouse). If we did, more robust models might be financially attractive too.
    - yunohn 5y ago
      I’m quite certain that replacing truck drivers with AI drivers would save the environment more than building even more warehouses.
    - bluGill 5y ago
      What is the environmental damage from making something not needed? There is a lot of energy in window glass, refined iron,and all the other parts of a car.
rolph 5y ago
here is a basic treatment of the topic of semiconductor fabrication: https://en.wikipedia.org/wiki/Semiconductor_device_fabrication https://en.wikipedia.org/wiki/Semiconductor_device_fabricati... this extends to CMOS VLSI fabrication. silicon wafers are required as general fodder, as copper clad pc board is to discrete analog production. https://en.wikipedia.org/wiki/Wafer_(electronics)#Production https://en.wikipedia.org/wiki/Wafer_(electronics)#Production the wafers require pulled ingots of silicon, these must be extremly pure and of extremely regular crystal latticing https://en.wikipedia.org/wiki/Boule_(crystal) https://en.wikipedia.org/wiki/Boule_(crystal)
flyinglizard 5y ago
If you check the inventory of a company like TI, it seems as if their manufacturing went offline overnight. You can not find TI parts anymore on Digikey. Same for ST. This is unthinkable. Only some companies that are a bit more specialized and upmarket like Analog Devices still have some stuff left. I wonder what would be the long lasting effect for these companies where entire products will get redesigned around what's available - many times these product designs live for 5-10 years. How many companies had to get TI parts out of their products? How's that going to affect TI revenue in few years time?
- etaioinshrdlu 5y ago
  Meh, there are thousands of microcontrollers from TI available, in stock, on digikey. https://www.digikey.com/en/products/filter/embedded-microcontrollers/685?s=N4IgjCBcoLQExVAYygFwE4FcCmAaEA9lANogCsI%2BAnCALoC%2B%2BME0IKkAZgIYA2AznkIkQcKgDY69KUA https://www.digikey.com/en/products/filter/embedded-microcon... Many of them have quantity thousands in stock. Especially the MSP430 line. Granted, maybe the chips you need are not available, but you're exaggerating a bit.
  - flyinglizard 5y ago
    TI PMICs, about 1800 parts in stock, out of 3700 “normally stocking”. TI temperature sensors, 300 in stock out of 600 normally stocking. It’s the often used parts that go first. But let’s put TI aside for a second: search STM32, there are 45 parts out of 1571 normally stocking (!).
grycefispies 5y ago
I find it fascinating that through all this, rarely if ever is it mentioned through traditional media channels that the reason in large part for all of this might just be because of our over-reliance on China and other countries when it comes to manufacturing. How beautiful would it be if chips, and many other things, were built here in the US? In addition to the myriad of obvious benefits, another would be not having to wait over a month or more between a chip “rolling off the line” and finally making the month or more long trip from overseas. Sure, most news articles regarding this issue will mention offshore production in passing - its impossible not to. But very few if any are actually making that a focal point of the article.
- throwaway2048 5y ago
  china does not, and never has made the vast majority of ICs
  - fuzzfactor 5y ago
    OTOH, when US chipmaking moved overseas, Taiwan was the only China that could be considered.
neonate 5y ago
http://web.archive.org/web/20210902153602/https://www.bloomberg.com/graphics/2021-chip-production-why-hard-to-make-semiconductors/ http://web.archive.org/web/20210902153602/https://www.bloomb...
tus89 5y ago
We are making more. Lots more. But we are buying even more than that. Its called demand > supply.
- amelius 5y ago
  That's too simple. E.g. why aren't the prices increasing such that the buying stops?
  - forty 5y ago
    Maybe the buyers don't have suddenly more money to spend.
    - asdff 5y ago
      Then they do what they always do and pass the bill to the consumer. Its 2021, what are you not going to buy a computer and cell phone? Technology like this is a utility now.
      - forty 5y ago
        I think most phone purchases might not be people purchasing a phone because they need one, but people purchasing a newer phone because it's cool. And while people certainly pour crazy amount of money in those gadgets, I'm sure there is a price limit when they are not buying a new one.
        asdff 5y ago
        Ask any of your peers why they upgrade phones. 9/10 will tell you their old one was too old and slow to run modern software or the battery was toast, and that happens in just a few years for some phones. My roomate will probably be upgrading their iphone X soon, not because they want a new iphone, but because its starting to do weird things like not be able to take screenshots and is overall far slower than when he first got the device. Same story with the 6s the X replaced years ago. New phones haven't been cool for a long time, we've been buying the exact same slab of glass for like a decade.
azinman2 5y ago
I’ve always wondered, why are silicon wafers a circle when you’re stamping out rectangles from it? It seems so wasteful. I’m sure there’s got to be a reason…
- AlotOfReading 5y ago
  That's how the crystal grows when they form the ingot. You could square them up, but that's extra processing steps and wastes area.
- BenoitEssiambre 5y ago
  Because before it's a wafer, it's a big sausage of monocrystalline silicon: https://en.wikipedia.org/wiki/Czochralski_method https://en.wikipedia.org/wiki/Czochralski_method
- Isamu 5y ago
  The silicon is grown in a process that produces long cylinders that are then sliced into wafers. Silicon is not molded, cast or extruded, so the shape is result of the growing process. https://en.m.wikipedia.org/wiki/Czochralski_method https://en.m.wikipedia.org/wiki/Czochralski_method
- Chyzwar 5y ago
  https://www.sas-globalwafers.co.jp/eng/products/wafer/process.html https://www.sas-globalwafers.co.jp/eng/products/wafer/proces...
- deleted 5y ago
  [deleted]
nullc 5y ago
If you make a product with low margins it is much better for you to under-produce rather than over-produce. I suspect this makes it somewhat hard to restart the economy as there isn't any surplus of a lot of materials. And since downstream consumers are blocked, they fail to generate the demand needed to justify bringing up production.
- mmmBacon 5y ago
  Semiconductor companies traditionally operate at high gross margins close similar to software companies. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
  - nullc 5y ago
    good point, though not necessarily true for the upstream outputs they consume!
glanard_frugner 5y ago
chip shortage is due to smic sanctions, no one seems to want to talk about this
nikkinana 5y ago
Because china
SimeVidas 5y ago
Chip manufacturers: Everything is a mess, all we can make are these decade-old, super outdated chips. Nintendo: Perfect, give me all of them.
- Gigachad 5y ago
  Those old and cheap chips seem to be hit the hardest. I can easily buy an M1 macbook today but buying a washing machine or a basic microcontroller is sold out for an undetermined time.
drdd 5y ago
no surprise if apple chips advance and take over US market by 2024
- skohan 5y ago
  they would need fabs to do anything about the shortage
Animats 5y ago
What worries me is that a shortage economy could become the new normal. If you're selling 100% of production and can't fill all the orders, profits are great. What kept companies from running in that mode was fear of competition. If the "free market" no longer generates new entrants, why expand and risk overcapacity and losses?
- farmerstan 5y ago
  It means that inflation is going to continue. You raise prices to abate demand
- uDontKnowMe 5y ago
  Why wouldn't companies raise their prices to match demand in the long term?
- LeoPanthera 5y ago
  Basic supply and demand economics. Low supply means high prices but it also means low unit sales, and this is rarely the most profitable state. Once supply recovers, and it will recover, supply will increase. Hey, this "supply and demand" curve picture on Wikipedia is tiny, anyone got a freely licensed higher resolution one they can upload? https://en.wikipedia.org/wiki/File:Fig5_Supply_and_demand_curves.jpg https://en.wikipedia.org/wiki/File:Fig5_Supply_and_demand_cu...
  - ComputerGuru 5y ago
    Free money throws a wrench in that because you’ll have parties willing to spend drastically more than a product is worth (be it due to some combination of one or more of free government money, lack of common sense, or obscene wealth) giving suppliers an opportunity to raise prices beyond what they normally could to compensate for the lost profit margins due to low unit sales. It’s a wacky world out there right now.
    - thomasjudge 5y ago
      Like in the real estate market right now in a lot of places in the US
TedShiller 5y ago
It’s not a shortage it’s called inflation
fortran77 5y ago
We've been unable to get USRPs -- and we need a few dozen for a project. We're starting to look at chinese "clone" versions to see if they're any good. National Instruments has no idea when they can ship again, and no supplier has any: (See Newark, for example) https://www.newark.com/search/prl/results?st=usrp&sort=P_PRICE|1 https://www.newark.com/search/prl/results?st=usrp&sort=P_PRI...
- sneak 5y ago
  There seem to be a fair number of secondhand ones on eBay.
  - fortran77 5y ago
    The fact that the counterfeits exist make it difficult to buy reliably on eBay.
pcurve 5y ago
Key takeaway "factories are more advanced and cost over $20 billion each." "Once you spend all that money building giant facilities, they become obsolete in five years or less. To avoid losing money, chipmakers must generate $3 billion in profit from each plan"
mensetmanusman 5y ago
This winter will be interesting when furnaces break and there is no way to repair them.
twarge 5y ago
Anecdotally, I find that parts that used to be in stock are simply bought up en masse by speculators, and then are resold at a huge markup. So you will routinely find that all the authorized distributors are zeroed out and all the unauthorized distributors are selling for 2x-100x the price. I'm not sure when this became a thing, but it's very real to me. It's a snowball effect; these folks get better and better at buying everything up, and then get all the capital to continue and expand the process. I have stock notifications everywhere and everything is gone as soon as it is posted. Regarding the article - it is definitely not all about fancy fabs that can't be built - these are analog and power parts! And microcontroller fabs are fancier, but usually many many nodes behind state of the art. Maybe it is a capital thing, but every fab I've ever encountered is more than busy. Sure, you lose money trying to do the hardest thing and failing, but the problem is so widespread across so many non-edge products that it must be explained by other factors.
- topspin 5y ago
  "it must be explained by other factors" It's consolidation of manufacturing. Many products and product lines have exactly 1 manufacturer today. No competition. No reason not to just run existing fabs, forego investing in more capacity and make bank while prices skyrocket.
nanis 5y ago
For the same reasons that the Soviet Union could not keep grocery stores stocked most of the time.
- Gigachad 5y ago
  Because farms cost $18 billion dollars each and become obsolete in less than 5 years?
m0llusk 5y ago
Who is "we", Kimosabe?
quickthrower2 5y ago
This explains the shortage in very fast chips, but why do cars etc. have a chip shortage? Cant they use slower chips with fewer transistors that hopefully can be manufactured more easily by more companies?
- samhain 5y ago
  Cars already use larger slower lithography sizes, which are more resilient to temperature changes, but also can be lower margin profit, since they take up more space on a standard silicon wafer. Older fabs, when spun down, may not just sit there, and may have their hardware cannibalized or at least the space repurposed for something profitable. So the old machines usually can’t just be turned on. There’s also a people-problem where that specific equipment may be understood by a select group of people and they may not be available. There are also problems surrounding qualifications of parts and the supply chain restrictions that suppliers are held to by manufactures. So, trying to replace even just one part on a design that is locked down can be quite painful for a company. We are having many types of parts shortages at this time though, which exacerbates that experience. Even so, a much “slower part” usually won’t have the same feature set, and may not have the same memory peripherals pinned out, requiring further qualification. Hardware changes of that level are usually done 2-3 years in advance for all of the paperwork and qualification steps. You’d have to build today-cars with standardized qualified parts from years ago. An outrageous example might be trying to stick a cassette-tape head-unit in your latest 2022 car.
de_nied 5y ago
On a related note, ETH 2.0 is coming around the corner, which is going to result in a flood of used GPUs to the market (hopefully driving prices down). This will happen sometime in the next two years I believe.
tmellon2 5y ago
Many consumers fuel this demand by sheer convenience. I personally know of many PC users who order a new laptop/machine, when all they require is a SSD upgrade to their hard-drive. Unfortunately they are not tech-savvy to do a reinstall of the OS. For them it is simply more convenient to order a newer machine. In some extreme cases, all they need is an external drive to store their data and to physically wipe down of their computer to remove the dirt/crumbs/grime from 2 years of usage.
yogrish 5y ago
If any one is interested to knwo how complex the chio making process is and why it is not so easy to set up a plant. https://youtu.be/CkNn98WE5_k https://youtu.be/CkNn98WE5_k
justbored123 5y ago
It would be nice to see some serious study that could tell us how much of it is 1. Disruption of supply chains 2. Money printing for Covid stimulus giving additional spending power to consumers increasing demand above the average. 3. Money printing for Covid stimulus reducing demand for low paying jobs. 4. Scalpers. 5. Speculation on the part of manufacturers that prefer to increase prices instead of investing long term to expand production. 6. Other.
rbrbr 5y ago
The article didn’t answer the question it asked in it’s headline. Not the first time I wasted my time on such false premise. Why?
Aeolun 5y ago
So we can just make more. We simply have to spend a prohibitive amount of money and some time that’s longer than the current election cycle.
fuzzfactor 5y ago
Why can't we just do without and re-issue some 1966 Mustangs and Broncos for a while? 1959 Corvettes and Cadillacs wouldn't be bad either. Even a 1965 Beetle when they still had a flat windshield. They would fly off the shelf.
TedShiller 5y ago
There is no shortage if you pay enough. This is also known as inflation.
csense 5y ago
Okay, so you need a $20 billion factory to put out 256-core behemoths that power servers with terabytes of RAM. But if you're GM, you don't need the latest Xeon. You need a 100 MHz single-core microcontroller, that normally sells for $2 to a hobbyist ordering a single chip, but probably something like $0.50 if you're GM and you order a million. GM would probably happily pay $20 for that microcontroller if it's holding up a $40,000 truck. If those microcontrollers cost 0.1% of what a Xeon costs, shouldn't that mean, to a first order of magnitude, the factory that produces a 100 MHz microcontroller should cost 0.1% of what the factory costs to produce a Xeon? How slow / expensive would it be if you wanted to set up a factory to pump out microcontrollers for GM trucks instead of Xeons for Amazon servers?

409 points by hhs 5y ago

amelius 5y ago

Yes. Designing boards around the shortage is quickly becoming a new artform.

toomuchtodo 5y ago
Resiliency and degrading gracefully is beauty.
mrfusion 5y ago
Any further reading on this? I’d like to understand it more. Are there certain chips that are plentiful that we could port a lot of software over to? (Might be a good business opportunity if so)
- jbay808 5y ago
  I would guess that the GP means designing such that your board accepts multiple footprints for compatible parts, so that if your first choice of op amp (or voltage regulator, etc) goes out of stock you can populate another one. That might be a similar part by another company, or it might be an identical part in a different package (often ICs are available in two or three package shapes, and you might not be able to predict which ones will be in stock).
- jmwilson 5y ago
  It basically means order sufficient parts before starting layout or even before finalizing the schematic. It's not just microcontrollers that are scarce, it's also "dumb" ICs like power management, discrete logic, A/D interface, etc.
- krisoft 5y ago
  > Are there certain chips that are plentiful that we could port a lot of software over to? I sense a potential misunderstanding here: Not every chip runs code. Microcontrollers and processors do, but there are many different kind of chips. Some convert voltages, some massage signals, some drive motors, etc. Why is this important? Porting code will only help you when you are swapping microcontrollers or processors. Which is just a tinny sliver of all the ICs in use. Porting code won't get you anywhere if what you are missing from your BOM is a boost-buck IC, or an opamp.
- asdff 5y ago
  Time to start building clusters out of salvaged pentiums
joncrane 5y ago
Wasn't Wozniak an absolute wizard at minimizing chip count on circuit boards? What used to be a lost art is turning into one of the hottest skills around.
- dvh 5y ago
  https://en.wikipedia.org/wiki/Muntzing https://en.wikipedia.org/wiki/Muntzing
  - quickthrower2 5y ago
    Deserves a HN submission of its own!

butz 5y ago

How about using old hardware for longer and building optimized software that performs great even on old hardware?

fny 5y ago
This isn’t about computers. It’s about all the other things that have chips in them. Look up SiC chips in particular, they’re in everything.
- PeterisP 5y ago
  The simple things with chips in them don't (or shouldn't) have the expected growth of computing power that makes parts obsolete. Like, if a washing machine or a car's fuel injector needs some chips, we should be able to reuse chips from older washing machines and older fuel injectors which we generally throw out because of a mechanical failure with all their electronics intact, but currently it seems that all these chips get just discarded, no one cares about them.
  - Gigachad 5y ago
    It would seem exceedingly difficult to reuse chips at scale. The software and pcb is deigned around one microcontroller in particular and it is not trivial to swap them out with others. So if I design my washing machine around a particular chip, I could order a million of them for 5 cent each, or I would have to: * somehow identify other models which have the chip * find 1 million of them about to be discarded * rip them open, desolder, collect these parts * discard the rest of the machine * do this for about 10 cents per washing machine combined with the fact that washing machines usually last a decade and will be dying out over a time period spread out over 10-20 years after manufacturing time. How on earth would it be possible to pull off and by that time, these chips will be very obsolete / impossible to order new ones.
    - ant6n 5y ago
      How about creating the standard for a small set of some sort of industrial raspberri pi, with a replacable (or flashable) ROM?

mindvirus 5y ago

This is an interesting article, but it doesn't answer why we have this shortage. Presumably without COVID, companies projected what demand would be for years out and could plan manufacturing capacities. What about COVID caused the shortage? Is it shipping speeds? Change in demand? Less efficiency down the supply chain due to health requirements? Trade changes?

Bud 5y ago
You expected an actual useful explanation of a complex tech issue from Bloomberg? The next time Bloomberg manages that will be the first time. Completely, utterly useless for tech reporting of any kind.
- deleted 5y ago
  [deleted]
YZF 5y ago
Nobody knows for sure. It's a complex phenomena. - Blame Toyota with their Just In Time inventory management ideas. - Factory closures, lockdowns, etc. - Increased demand for certain items. Everyone's at home surfing the web, playing games on their computers, mining bitcoin? - Monetary policies are creating excess (see bitcoin mining) demand. - Shipping delays. Ports running at reduced capacity. Ships sitting at sea waiting to get access. Suez Canal blocked. Shipping companies have no spare capacity. Blame Toyota. - Building new factories takes time, getting/building new machinery takes time, everything was set up to not have any over capacity (since that's loss) ... blame Toyota again. - Big companies swallowed everyone so we don't have as much diversity of products as we used to. Probably related to easy money as well. tl;dr Toyota, Greenspan, Covid ... Somewhat in that order. EDIT: Should probably add the trade war between the US and China to that list.
- Multicomp 5y ago
  > - Blame Toyota with their Just In Time inventory management ideas. Toyota had a stockpile [1] of semiconductors and are only now-ish running into the same supply problems everyone has been since March 2020. [1] https://www.bloomberg.com/news/articles/2021-04-07/how-toyota-s-supply-chain-helped-it-weather-the-chip-shortage https://www.bloomberg.com/news/articles/2021-04-07/how-toyot... > But the Tohoku earthquake’s aftermath pushed Toyota to increase flexibility, and the value of inventory Toyota carries has almost doubled since 2011. Speaking at a briefing in February, Toyota Chief Financial Officer Kenta Kon said as part of the company’s business continuity plans, it keeps as many as four months of stock for some crucial components such as chips. Toyota didn’t expect the semiconductor shortage to disrupt production in the near term, he said.

mrfusion 5y ago

Are there any estimates on when the shortage might be over?

lvl100 5y ago
When this run in crypto is finished.
- mrfusion 5y ago
  I thought crypto was mostly gpu though?
  - Hjfrf 5y ago
    It's mixed. Ethereum is gpu, bitcoin is ASICs, monero is cpu for example. Heavy overlap in raw materials and supply chain regardless.
  - Fordec 5y ago
    GPUs are made from silicon. Other chips are also made from silicon. Manufacturers will use said silicon to make whatever chips make them the most money per manufacturing run. Which, right now, is GPUs.
- sneak 5y ago
  This is not remotely the basis for the shortage. It is the basis for the high price of GPUs. There are massive shortages at all process node sizes AIUI, not just the cutting edge.

qualudeheart 5y ago

I welcome the chip shortage. I implore the national security state and the intelligence community to take action and intensify this trend. Thus the advance of artificial intelligence will be slowed and we will have more time to practice AI regulation and control. Only then may strong AI be permitted to eventuate. Otherwise it may destroy us. He who develops AI would be punished severely were we to live in a just world. We need a butlerian jihad against AI, led by the national security state, equipped by the brave men and women of Anduril incorporated. The damage to the rest of the economy is unfortunate but a cost I am willing to accept. Now what do we actually need that hardware for, aside from training language models or mining bitcoin? Why don’t we also develop more efficient software? Why don’t we pay people to do so? Many of you in this thread could work on this, and be paid handsomely for it.

nightfly 5y ago
What are you afraid AI will do?
- andrewnicolalde 5y ago
  Perhaps to further what oppressive humans have long wanted but not previously had the capability to do.
  - qualudeheart 5y ago
    Per the orthogonality thesis (Bostrom) I do not even expect AI to have similar moral values to ours. I expect it to instrumentally secure power to better pursue it’s goals, and in the process thereof establish hegemony over us and other AIs. From there it could easily try to kill us. I don’t want any of that. My preferred outcome seems to be what Elon Musk wants, human cyborgs amplified with brain computer interfaces and control over machines; never a machine with control over many humans or posthumans.
- qualudeheart 5y ago
  The main threat model is a Yudkowskian rapid takeoff where artificial general intelligence recursively self improves far beyond human intelligence, making it like a god with absolute power compared to us. This corresponds to the agentic model of artificial general intelligence put forth by Bostrom. Yudkowskian AGI might fail in the long term since it would run into Gödelian problems it would never be able to solve but infinitely loop on. That humans are immune to those and can behold contradictions testifies to a Penrosian supra-turing-machinic aspect to the human mind. Man has a transcendent aspect even if we may not be meta-cognitively aware of it at all times. AGIs could possibly be destroyed through the use of such problems, akin to magical spells wielded by powerful magi. A secondary threat model of mine is based on a world of non-general, non-agentic strong AI with many discrete “tool AIs” with superhuman ability in one unique area. The secondary model is mostly harmless except for military AI. The genius of Andúril Incorporated lies in their creation of drones designed to destroy other drones. This future is still very dangerous, and I hope that the security state will take action to prevent it’s arrival.

mathverse 5y ago

It's not only chips.It's everything.Timber,iron,steel,building materials, certain types of food. It's the increased consumption of these goods because of insane lockdowns all around the world.People did not spend money on holidays but decided to upgrade their homes and electronics.

laurent92 5y ago
Or is it the adolescence of China, once a baby in consumerism, now a hungry teenager engulfing all the calories it can?
- pphysch 5y ago
  Or is it the ongoing & economically unjustified printing of multiple trillions of USD since 2020, which forces firms globally to move away from money or get ripped off?
sbierwagen 5y ago
Lumber peaked back in May at $1,600. It's down to $576 now: https://www.nasdaq.com/market-activity/commodities/lbs https://www.nasdaq.com/market-activity/commodities/lbs
- imtringued 5y ago
  Oh no hyperdeflation is coming!! I am honestly tired of this. Yes we had a pandemic but we didn't have a war that killed and destroyed the very thing that produces the things that we are short of right now.
quickthrower2 5y ago
Why are lockdowns insane for a novel, highly transmittable and deadly and mutating virus for which there was no vaccine and although there is now it is not rolled out enough globally yet.

eande 5y ago

Old article May 5th of this year, which in that industry is a long time. Nevertheless the situation since did actually get worse as predicted. Not only is it chip shortage we should call it component shortage. A standard 10k 0406 package resistor is sold out around the world. Many high quality, high density capacitor you can't get. The same goes for the standard semiconductor parts like diodes, MOSFET or TVS. Semiconductor sales rep give you now +50 weeks lead time for the many ICs meaning no real forecast at this point. They generally tell you 2022 will be tough maybe Q4 will ease up. Many of the major semi companies are running at fairly high capacity, but supporting elements like IC package build capacity, sometimes materials can't keep up as well. We looked at some boards to redesign, but when you are short hundreds of parts it gets nearly insurmountable to manage a hardware redesign. Interesting and challenging allocation period, definitely worse than 2003-2005.

wereHamster 5y ago
Is the shortage of common components (such as the 10k 0406 resistor you mention) due to: increased demand that can't be met due to unavailable capacity or because the manufacturers scaled production down during the past year and now there is no capacity to scale it back up? Or because supply chain shortages that feed the fabs (raw materials)?
- baybal2 5y ago
  Passives are actually quite quick to produce. I think it's a good proof that a few giant distributors in China keep buying, and flushing them down the drain.
  - q-big 5y ago
    > Passives are actually quite quick to produce. I think it's a good proof that a few giant distributors in China keep buying, and flushing them down the drain. What are these immense amounts of passives used for?
    - CompuHacker 5y ago

tpmx 5y ago

I've been wondering: How much of this is caused by component fragmentation? As an example, Digikey lists a staggering 55k separate microcontroller variants (active products): https://www.digikey.com/en/products/filter/embedded-microcontrollers/685?s=N4IgjCBcpgnAHLKoDGUBmBDANgZwKYA0IA9lANogAMIAusQA4AuUIAykwE4CWAdgOYgAviKA https://www.digikey.com/en/products/filter/embedded-microcon...

YZF 5y ago
You'd think that would be a positive? Presumably only a very tiny fraction of those are suitable for automotive applications e.g. also presumably some of those were only made in smaller quantities trying to hook some big customer. I think we've always had a pretty large variety of microcontrollers, just something like an 8051 was available in hundreds of options from various companies. Microchip has always had lots of different ones with slightly different options. Sometimes (often?) those are the same die in a different package with some different build time options enabled.
- tpmx 5y ago
  I'm not following you how on that would be a positive (in a chip shortage situation). Say you use 50 microcontrollers in a car. Probably 15+ separate part numbers? One or two of those can't be acquired, so boards need to be redesigned and the production line is held up. Now, imagine a different world with wide cross-licensing between manufacturers and instead of doing hundreds of separate variants slighly cost optimized for various purposes for each major microcontroller design, let's just have a small number of kitchen sink variants.
  - yjftsjthsd-h 5y ago
    It's a trade-off though, since every one of those controllers will probably be less efficient and more power hungry then more specific parts would have been
    - tpmx 5y ago

buitreVirtual 5y ago

"Former Intel Corp. boss Craig Barrett called his company’s microprocessors the most complicated devices ever made by man." Not very smart to boast about this. So AMD makes more performant chips with less complicated designs?

jml7c5 5y ago

I do wonder how much of this is exacerbated by hoarding. Similar to the Great Toilet Paper Shortage, where fear of continued shortages caused panic buying which caused extended shortfall of supply. And that was in an industry where production was not constrained and warehouses were full!

11thEarlOfMar 5y ago
If we can find availability of any of dozens of parts we are short, CEO orders are to buy out the inventory. Hoarding is a component of the shortage, and may be the both trigger and cause for extending the problem from months to years. Semi companies are buying new equipment at record levels, but even the equipment companies are thrashing to find chips to control their equipment. Analysts may want to keep an eye on balance sheet inventories at electronics manufacturers like Jabil, Flextronix, Fabrinet and their ilk to get an idea of the extent of hoarding in the market.
intricatedetail 5y ago
You can buy any chip that is not available from legitimate sources in China in pretty much any quantities. I wonder at this point if this is not a part of hybrid warfare.
bloggie 5y ago
I have to imagine there is quite a lot of hoarding going on, but by a different name. Normally I buy components for the next 6 months of expected use. TI sent me an email a couple weeks ago asking me to place orders for the next 18 months of use to guarantee delivery. So there I go placing orders for 3x what I normally buy. But it isn't hoarding, it is guaranteeing allotment. The part brokers have locked in their quantities months ago, also increasing demand. What are you going to do.

mlang23 5y ago

Perfect timing, for once. In 2019, I jumped onto the Sonos train, got rid of a bunch of old hardware, (finally) replaced my desktop with a ThinkPad X1. In early 2020 (before the first lockdown) I completely redid my little "home office", investing in 4 combinable tables, a new 8-channel USB soundcard, a MIDI controller, and some more stuff I should always have had... Two weeks after I managed to clean out the apartment from old tables and stuff, lockdown came. In summer 2020, I finally got the long-overdue replacement for one of our HPC clusters at work. Neitzer at work nor at home do I plan to invest any money into hardware in the next two years. Sure, it might sound easy from where I am to say that, but I find this period of the world a perfect time to do some consume consolidation. Looking back, I surely spent a bit too much on hardware over the last 20 years. Thats fine in the first few years of your career, because after all, those are not just toys, they actually help you acquire knolwedge. However, after a time, it somehow becomes silly. If I am true to myself, there is really nothing I need right now. And I guess that applies to more people then just me.

rossdavidh 5y ago

While it is obviously not unrelated to the pandemic chaos, there is a deeper issue. As Nassim Taleb has often pointed out, the same things that make a system "efficient" also can often be viewed as making it fragile. "Just-in-time" means "no buffer". We have, for decades, been doing as much as possible to make all our economic systems as efficient as possible, which is to say with no extra capacity. Thus, if it had not been the pandemic, it would eventually have been something else. Sooner or later, there is always a shock to the system. If you have made sure that every step in a long complex chain is optimized to have very little slack, the thing you have optimized for is fragility.

fny 5y ago
Given you can't predict what the shock will be or its consequences, how are you exactly going to create a buffer? Creating broad redundancies would result in lots and lots of waste both damaging to a bottom line and the environment. Also, is this "fragility" really that big of a problem? Sure, prices are going to move up 20-30% for a year or two until the supply chain issues ease, but is that worth driving up costs for decades preparing for potentially the wrong issue?
- keoqpkk 5y ago
  We don't really put a price on environmental and societal damage that "just-in-time" does (thinking of truck drivers living on the highway effectively acting as the warehouse, saving the company to build an actual warehouse). If we did, more robust models might be financially attractive too.
  - yunohn 5y ago
    I’m quite certain that replacing truck drivers with AI drivers would save the environment more than building even more warehouses.
  - bluGill 5y ago
    What is the environmental damage from making something not needed? There is a lot of energy in window glass, refined iron,and all the other parts of a car.

rolph 5y ago

here is a basic treatment of the topic of semiconductor fabrication: https://en.wikipedia.org/wiki/Semiconductor_device_fabrication https://en.wikipedia.org/wiki/Semiconductor_device_fabricati... this extends to CMOS VLSI fabrication. silicon wafers are required as general fodder, as copper clad pc board is to discrete analog production. https://en.wikipedia.org/wiki/Wafer_(electronics)#Production https://en.wikipedia.org/wiki/Wafer_(electronics)#Production the wafers require pulled ingots of silicon, these must be extremly pure and of extremely regular crystal latticing https://en.wikipedia.org/wiki/Boule_(crystal) https://en.wikipedia.org/wiki/Boule_(crystal)

flyinglizard 5y ago

If you check the inventory of a company like TI, it seems as if their manufacturing went offline overnight. You can not find TI parts anymore on Digikey. Same for ST. This is unthinkable. Only some companies that are a bit more specialized and upmarket like Analog Devices still have some stuff left. I wonder what would be the long lasting effect for these companies where entire products will get redesigned around what's available - many times these product designs live for 5-10 years. How many companies had to get TI parts out of their products? How's that going to affect TI revenue in few years time?

etaioinshrdlu 5y ago
Meh, there are thousands of microcontrollers from TI available, in stock, on digikey. https://www.digikey.com/en/products/filter/embedded-microcontrollers/685?s=N4IgjCBcoLQExVAYygFwE4FcCmAaEA9lANogCsI%2BAnCALoC%2B%2BME0IKkAZgIYA2AznkIkQcKgDY69KUA https://www.digikey.com/en/products/filter/embedded-microcon... Many of them have quantity thousands in stock. Especially the MSP430 line. Granted, maybe the chips you need are not available, but you're exaggerating a bit.
- flyinglizard 5y ago
  TI PMICs, about 1800 parts in stock, out of 3700 “normally stocking”. TI temperature sensors, 300 in stock out of 600 normally stocking. It’s the often used parts that go first. But let’s put TI aside for a second: search STM32, there are 45 parts out of 1571 normally stocking (!).

grycefispies 5y ago

I find it fascinating that through all this, rarely if ever is it mentioned through traditional media channels that the reason in large part for all of this might just be because of our over-reliance on China and other countries when it comes to manufacturing. How beautiful would it be if chips, and many other things, were built here in the US? In addition to the myriad of obvious benefits, another would be not having to wait over a month or more between a chip “rolling off the line” and finally making the month or more long trip from overseas. Sure, most news articles regarding this issue will mention offshore production in passing - its impossible not to. But very few if any are actually making that a focal point of the article.

throwaway2048 5y ago
china does not, and never has made the vast majority of ICs
- fuzzfactor 5y ago
  OTOH, when US chipmaking moved overseas, Taiwan was the only China that could be considered.

neonate 5y ago

http://web.archive.org/web/20210902153602/https://www.bloomberg.com/graphics/2021-chip-production-why-hard-to-make-semiconductors/ http://web.archive.org/web/20210902153602/https://www.bloomb...

tus89 5y ago

We are making more. Lots more. But we are buying even more than that. Its called demand > supply.

amelius 5y ago
That's too simple. E.g. why aren't the prices increasing such that the buying stops?
- forty 5y ago
  Maybe the buyers don't have suddenly more money to spend.
  - asdff 5y ago
    Then they do what they always do and pass the bill to the consumer. Its 2021, what are you not going to buy a computer and cell phone? Technology like this is a utility now.
    - forty 5y ago
      I think most phone purchases might not be people purchasing a phone because they need one, but people purchasing a newer phone because it's cool. And while people certainly pour crazy amount of money in those gadgets, I'm sure there is a price limit when they are not buying a new one.
      - asdff 5y ago
        Ask any of your peers why they upgrade phones. 9/10 will tell you their old one was too old and slow to run modern software or the battery was toast, and that happens in just a few years for some phones. My roomate will probably be upgrading their iphone X soon, not because they want a new iphone, but because its starting to do weird things like not be able to take screenshots and is overall far slower than when he first got the device. Same story with the 6s the X replaced years ago. New phones haven't been cool for a long time, we've been buying the exact same slab of glass for like a decade.

azinman2 5y ago

I’ve always wondered, why are silicon wafers a circle when you’re stamping out rectangles from it? It seems so wasteful. I’m sure there’s got to be a reason…

AlotOfReading 5y ago
That's how the crystal grows when they form the ingot. You could square them up, but that's extra processing steps and wastes area.
BenoitEssiambre 5y ago
Because before it's a wafer, it's a big sausage of monocrystalline silicon: https://en.wikipedia.org/wiki/Czochralski_method https://en.wikipedia.org/wiki/Czochralski_method
Isamu 5y ago
The silicon is grown in a process that produces long cylinders that are then sliced into wafers. Silicon is not molded, cast or extruded, so the shape is result of the growing process. https://en.m.wikipedia.org/wiki/Czochralski_method https://en.m.wikipedia.org/wiki/Czochralski_method
Chyzwar 5y ago
https://www.sas-globalwafers.co.jp/eng/products/wafer/process.html https://www.sas-globalwafers.co.jp/eng/products/wafer/proces...
deleted 5y ago
[deleted]

nullc 5y ago

If you make a product with low margins it is much better for you to under-produce rather than over-produce. I suspect this makes it somewhat hard to restart the economy as there isn't any surplus of a lot of materials. And since downstream consumers are blocked, they fail to generate the demand needed to justify bringing up production.

mmmBacon 5y ago
Semiconductor companies traditionally operate at high gross margins close similar to software companies. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
- nullc 5y ago
  good point, though not necessarily true for the upstream outputs they consume!

glanard_frugner 5y ago

chip shortage is due to smic sanctions, no one seems to want to talk about this

nikkinana 5y ago

Because china

SimeVidas 5y ago

Chip manufacturers: Everything is a mess, all we can make are these decade-old, super outdated chips. Nintendo: Perfect, give me all of them.

Gigachad 5y ago
Those old and cheap chips seem to be hit the hardest. I can easily buy an M1 macbook today but buying a washing machine or a basic microcontroller is sold out for an undetermined time.

drdd 5y ago

no surprise if apple chips advance and take over US market by 2024

skohan 5y ago
they would need fabs to do anything about the shortage

Animats 5y ago

What worries me is that a shortage economy could become the new normal. If you're selling 100% of production and can't fill all the orders, profits are great. What kept companies from running in that mode was fear of competition. If the "free market" no longer generates new entrants, why expand and risk overcapacity and losses?

farmerstan 5y ago
It means that inflation is going to continue. You raise prices to abate demand
uDontKnowMe 5y ago
Why wouldn't companies raise their prices to match demand in the long term?
LeoPanthera 5y ago
Basic supply and demand economics. Low supply means high prices but it also means low unit sales, and this is rarely the most profitable state. Once supply recovers, and it will recover, supply will increase. Hey, this "supply and demand" curve picture on Wikipedia is tiny, anyone got a freely licensed higher resolution one they can upload? https://en.wikipedia.org/wiki/File:Fig5_Supply_and_demand_curves.jpg https://en.wikipedia.org/wiki/File:Fig5_Supply_and_demand_cu...
- ComputerGuru 5y ago
  Free money throws a wrench in that because you’ll have parties willing to spend drastically more than a product is worth (be it due to some combination of one or more of free government money, lack of common sense, or obscene wealth) giving suppliers an opportunity to raise prices beyond what they normally could to compensate for the lost profit margins due to low unit sales. It’s a wacky world out there right now.
  - thomasjudge 5y ago
    Like in the real estate market right now in a lot of places in the US

TedShiller 5y ago

It’s not a shortage it’s called inflation

fortran77 5y ago

We've been unable to get USRPs -- and we need a few dozen for a project. We're starting to look at chinese "clone" versions to see if they're any good. National Instruments has no idea when they can ship again, and no supplier has any: (See Newark, for example) https://www.newark.com/search/prl/results?st=usrp&sort=P_PRICE|1 https://www.newark.com/search/prl/results?st=usrp&sort=P_PRI...

sneak 5y ago
There seem to be a fair number of secondhand ones on eBay.
- fortran77 5y ago
  The fact that the counterfeits exist make it difficult to buy reliably on eBay.

pcurve 5y ago

Key takeaway "factories are more advanced and cost over $20 billion each." "Once you spend all that money building giant facilities, they become obsolete in five years or less. To avoid losing money, chipmakers must generate $3 billion in profit from each plan"

mensetmanusman 5y ago

This winter will be interesting when furnaces break and there is no way to repair them.

twarge 5y ago

Anecdotally, I find that parts that used to be in stock are simply bought up en masse by speculators, and then are resold at a huge markup. So you will routinely find that all the authorized distributors are zeroed out and all the unauthorized distributors are selling for 2x-100x the price. I'm not sure when this became a thing, but it's very real to me. It's a snowball effect; these folks get better and better at buying everything up, and then get all the capital to continue and expand the process. I have stock notifications everywhere and everything is gone as soon as it is posted. Regarding the article - it is definitely not all about fancy fabs that can't be built - these are analog and power parts! And microcontroller fabs are fancier, but usually many many nodes behind state of the art. Maybe it is a capital thing, but every fab I've ever encountered is more than busy. Sure, you lose money trying to do the hardest thing and failing, but the problem is so widespread across so many non-edge products that it must be explained by other factors.

topspin 5y ago
"it must be explained by other factors" It's consolidation of manufacturing. Many products and product lines have exactly 1 manufacturer today. No competition. No reason not to just run existing fabs, forego investing in more capacity and make bank while prices skyrocket.

nanis 5y ago

For the same reasons that the Soviet Union could not keep grocery stores stocked most of the time.

Gigachad 5y ago
Because farms cost $18 billion dollars each and become obsolete in less than 5 years?

m0llusk 5y ago

Who is "we", Kimosabe?

quickthrower2 5y ago

This explains the shortage in very fast chips, but why do cars etc. have a chip shortage? Cant they use slower chips with fewer transistors that hopefully can be manufactured more easily by more companies?

samhain 5y ago
Cars already use larger slower lithography sizes, which are more resilient to temperature changes, but also can be lower margin profit, since they take up more space on a standard silicon wafer. Older fabs, when spun down, may not just sit there, and may have their hardware cannibalized or at least the space repurposed for something profitable. So the old machines usually can’t just be turned on. There’s also a people-problem where that specific equipment may be understood by a select group of people and they may not be available. There are also problems surrounding qualifications of parts and the supply chain restrictions that suppliers are held to by manufactures. So, trying to replace even just one part on a design that is locked down can be quite painful for a company. We are having many types of parts shortages at this time though, which exacerbates that experience. Even so, a much “slower part” usually won’t have the same feature set, and may not have the same memory peripherals pinned out, requiring further qualification. Hardware changes of that level are usually done 2-3 years in advance for all of the paperwork and qualification steps. You’d have to build today-cars with standardized qualified parts from years ago. An outrageous example might be trying to stick a cassette-tape head-unit in your latest 2022 car.

de_nied 5y ago

On a related note, ETH 2.0 is coming around the corner, which is going to result in a flood of used GPUs to the market (hopefully driving prices down). This will happen sometime in the next two years I believe.

tmellon2 5y ago

Many consumers fuel this demand by sheer convenience. I personally know of many PC users who order a new laptop/machine, when all they require is a SSD upgrade to their hard-drive. Unfortunately they are not tech-savvy to do a reinstall of the OS. For them it is simply more convenient to order a newer machine. In some extreme cases, all they need is an external drive to store their data and to physically wipe down of their computer to remove the dirt/crumbs/grime from 2 years of usage.

yogrish 5y ago

If any one is interested to knwo how complex the chio making process is and why it is not so easy to set up a plant. https://youtu.be/CkNn98WE5_k https://youtu.be/CkNn98WE5_k

justbored123 5y ago

It would be nice to see some serious study that could tell us how much of it is 1. Disruption of supply chains 2. Money printing for Covid stimulus giving additional spending power to consumers increasing demand above the average. 3. Money printing for Covid stimulus reducing demand for low paying jobs. 4. Scalpers. 5. Speculation on the part of manufacturers that prefer to increase prices instead of investing long term to expand production. 6. Other.

rbrbr 5y ago

The article didn’t answer the question it asked in it’s headline. Not the first time I wasted my time on such false premise. Why?

Aeolun 5y ago

So we can just make more. We simply have to spend a prohibitive amount of money and some time that’s longer than the current election cycle.

fuzzfactor 5y ago

Why can't we just do without and re-issue some 1966 Mustangs and Broncos for a while? 1959 Corvettes and Cadillacs wouldn't be bad either. Even a 1965 Beetle when they still had a flat windshield. They would fly off the shelf.

TedShiller 5y ago

There is no shortage if you pay enough. This is also known as inflation.

csense 5y ago

Okay, so you need a $20 billion factory to put out 256-core behemoths that power servers with terabytes of RAM. But if you're GM, you don't need the latest Xeon. You need a 100 MHz single-core microcontroller, that normally sells for $2 to a hobbyist ordering a single chip, but probably something like $0.50 if you're GM and you order a million. GM would probably happily pay $20 for that microcontroller if it's holding up a $40,000 truck. If those microcontrollers cost 0.1% of what a Xeon costs, shouldn't that mean, to a first order of magnitude, the factory that produces a 100 MHz microcontroller should cost 0.1% of what the factory costs to produce a Xeon? How slow / expensive would it be if you wanted to set up a factory to pump out microcontrollers for GM trucks instead of Xeons for Amazon servers?