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Can confirm. Anyone working in supply chain is now told to buy 1-4 year supply of as many of the critical chips needed as they can. It used to be all about how

Can confirm. Anyone working in supply chain is now told to buy 1-4 year supply of as many of the critical chips needed as they can. It used to be all about how JIT could it be. When the whole chip supply chain shifts from JIT to “get all you can while you can” it causes the shortages. 2nd hand market is seeing astounding mark-ups.

jnwatson 5y ago
If everyone buys 4 years of supplies, that exacerbates the problem. The supply chain bullwhip effect will be massive. For the next 3 years, fabs will be swimming in profit. After that, I expect a major correction.
- xxpor 5y ago
  Will the fabs have the discipline to actually use the extra cash injection wisely?
  - monocasa 5y ago
    They're the best positioned to do that, they're one of the last classic long tail, high capital investment portions of the industry. Each node is only competitive for a short while, but they have multiple nodes in the development pipeline because of how long it takes, and a misstep on a single node can devastate the whole company if you're not in the #1 spot originally. So the answer is we don't know it, depends on the management currently at the fab, but they have the right external incentive structure to handle it well.
- nickff 5y ago
  Everyone is suggested to place scheduled orders for the future. Nobody (that I’ve heard) is suggesting that you immediately purchase and carry four years of inventory. People in this market are generally very intelligent, and there have been a number of booms and busts in semiconductors in the last 30 years.
mohanmcgeek 5y ago
Does that mean most companies will be using 2020 generation chips until 2024? Sounds they'll dump it in trash eventually and it'll be a terrible waste of resources
- rubidium 5y ago
  Companies in my industry have products they sell for 10-20 years. The chips will get used. Product updates often keep the same chip, and the same chip is used across multiple product lines. EOL for these chips usually means a bunch of firmware engineers in sustaining need to scratch their head and read 10-15 year old documentation to find a viable replacement.
- deleted 5y ago
  [deleted]
- HWR_14 5y ago
  For the vast majority of things I buy that use chips (obviously not consoles, phones and computers) they could easily be using chips from 2010 and the only difference might be a slightly higher electricity draw.
- monocasa 5y ago
  Where I worked that I participated in the board design process, we'd get "lifetime buys" of chips on a many year cycle anyway for design stability reasons. Who cares if the microcontroller is using a couple more watts than it could be from aggressively respinning if it's sitting next to a 500w motor?
- 41b696ef1113 5y ago
  Chips are performing an astounding number of tasks these days. Microwaves, vacuum cleaners, toasters, etc. None of these applications require advanced chips and could settle for something from 20 years ago.
- mrtweetyhack 5y ago

jnwatson 5y ago

If everyone buys 4 years of supplies, that exacerbates the problem. The supply chain bullwhip effect will be massive. For the next 3 years, fabs will be swimming in profit. After that, I expect a major correction.

xxpor 5y ago
Will the fabs have the discipline to actually use the extra cash injection wisely?
- monocasa 5y ago
  They're the best positioned to do that, they're one of the last classic long tail, high capital investment portions of the industry. Each node is only competitive for a short while, but they have multiple nodes in the development pipeline because of how long it takes, and a misstep on a single node can devastate the whole company if you're not in the #1 spot originally. So the answer is we don't know it, depends on the management currently at the fab, but they have the right external incentive structure to handle it well.
nickff 5y ago
Everyone is suggested to place scheduled orders for the future. Nobody (that I’ve heard) is suggesting that you immediately purchase and carry four years of inventory. People in this market are generally very intelligent, and there have been a number of booms and busts in semiconductors in the last 30 years.

mohanmcgeek 5y ago

Does that mean most companies will be using 2020 generation chips until 2024? Sounds they'll dump it in trash eventually and it'll be a terrible waste of resources

rubidium 5y ago
Companies in my industry have products they sell for 10-20 years. The chips will get used. Product updates often keep the same chip, and the same chip is used across multiple product lines. EOL for these chips usually means a bunch of firmware engineers in sustaining need to scratch their head and read 10-15 year old documentation to find a viable replacement.
deleted 5y ago
[deleted]
HWR_14 5y ago
For the vast majority of things I buy that use chips (obviously not consoles, phones and computers) they could easily be using chips from 2010 and the only difference might be a slightly higher electricity draw.
monocasa 5y ago
Where I worked that I participated in the board design process, we'd get "lifetime buys" of chips on a many year cycle anyway for design stability reasons. Who cares if the microcontroller is using a couple more watts than it could be from aggressively respinning if it's sitting next to a 500w motor?
41b696ef1113 5y ago
Chips are performing an astounding number of tasks these days. Microwaves, vacuum cleaners, toasters, etc. None of these applications require advanced chips and could settle for something from 20 years ago.
mrtweetyhack 5y ago