Why can't the US make auto microprocessor chips?

[dlgoff]

TL;DR Summary

Why can't the US make auto microprocessor chips?

Why can't these companies make auto microprocessor chips?

 

[Borek]

Sure they could, but not as cheap as China or Taiwan does (due to safety, eco, labor regulations etc.), so they delegated production abroad to increase profits. As long as it worked, it worked, but it was asking for troubles from the very beginning.

Now it is not easy to change, as building a fab takes time and money. Huge money. And these fabs work on very small margins, so the return on investment requires many decades,

 

[phinds]

 

[Rive]

Why can't these companies make auto microprocessor chips?

Sure they would be able to, but for a new CPU to appear in actual (automotive) production takes some years (an by that time the actual shortage is supposed to end).

Ps.: by the way, I think not only CPUs are affected. We got a bunch of problem without of stock Power MOSFET components too.

 

[dlgoff]

... by that time the actual shortage is supposed to end

Hopefully

 

[dlgoff]

Thanks all. You all have been very helpful.

 

[DaveE]

Efficient economies are fragile economies. Whether it's ICs, building materials, toilet paper... No one wants to pay for excess capacity to respond to shocks to the system. It's particularly bad for high tech products (of any sort) because the capital investment and lead time are big.

 

[Filip Larsen]

Arstechnica (via wired.com) had a piece on that recently: https://arstechnica.com/gadgets/2021/11/why-the-chip-shortage-drags-on-and-on-and-on/

 

[anorlunda]

Arstechnica (via wired.com) had a piece on that recently: https://arstechnica.com/gadgets/2021/11/why-the-chip-shortage-drags-on-and-on-and-on/

Wow, that article lists very many reasons. The one reason that surprised me was this:

At the same time, US-imposed sanctions on Chinese companies like Huawei, a leading manufacturer of smartphones and networking gear, prompted some Chinese firms to begin hoarding as much supply as possible.

 

[dlgoff]

Arstechnica (via wired.com) had a piece on that recently: https://arstechnica.com/gadgets/2021/11/why-the-chip-shortage-drags-on-and-on-and-on/

Thanks Filip. Very informative.

 

[dlgoff]

Wow, that article lists very many reasons. The one reason that surprised me was this:

Wow is right. Thanks for that link: https://www.wired.co.uk/article/china-microchip-autonomy-huawei

 

[dlgoff]

Here's a YouTube news report from one of my local TV channels:

 

[artis]

One advice in those links is truly worthwhile - stop buying new phones all the time while your old one is perfectly fine.

I've been following this strategy for all my life and not because someone told me so but simply because I hate to throw away things that work. But in this regard the very marketing strategies of the largest semiconductor users are now coming back to haunt them. Since I remember myself smartphone companies like Samsung have been advertising "new models" with rehashing old features and adding new ones that are better by a tiny margin so that people constantly buy their new products even though it's absolutely unnecessary from a practical viewpoint.

So I guess I'm the loner in this regard as I run my phones until the battery cannot hold for more than a few hours or they physically disintegrate.

Can I get a "thank you" as I'm adding my 2 cents to solve the problem?

 

[nsaspook]

The fabs that make the needed chips won't be helped by the new state-of-the-art fabs anytime soon. The mature technology 6 and 8 inch (200mm) machines that make the bulk of >32-bit controllers and glue semiconductors are gone from the surplus market and there are no new mature tech machines to install at any price even if you have a building to put them in. Equipment for more 200mm processing capacity that was $100,000 in a dusty warehouse a few years ago is worth millions today.

https://semiengineering.com/200mm-demand-surges/

A surge in demand for various chips is causing shortages for select 200mm foundry capacity as well as 200mm fab equipment, and it shows no signs of abating in 2021.

Foundry customers will face a shortfall of 200mm capacity at select foundries at least in the first half of 2021, and perhaps beyond. Those customers will need to plan ahead to ensure they obtain enough 200mm capacity in 2021. Otherwise they could get locked out of the market altogether, or may need to pay a premium for that capacity.

The 200mm market is a sizeable business for device and equipment makers alike. More than 200 fabs in operation worldwide today produce chips using 200mm (8-inch) diameter wafers. Chipmakers use these 200mm fabs to manufacture chips based on mature processes, ranging from the 350nm to the 90nm nodes. Analog, display drivers, power management ICs (PMICs), and RF devices are among the chips produced in 200mm fabs.

Many of these devices aren’t manufactured in today’s state-of-the-art 300mm fabs. The 300mm fabs are used to process the most advanced chips, although they also manufacture devices at mature nodes from 65nm to 28nm.

https://www.forbes.com/sites/forbes...ve-already-been-manufactured/?sh=6384768e71ea

Fast forward to today and industry sources suggest 200mm fabs are at capacity across foundries. With production lines maxed out, chip makers must either expand capacity in existing fabs or build new ones. Both options require more equipment — of which, there is also a shortage. Most original equipment manufacturers (OEMs) no longer produce 200mm equipment (with some notable exceptions). Even if new equipment across the process supported 200mm, lead times can be up to 18 months for new equipment from OEMs, meaning, increased expenditure on new equipment today won't yield increased capacity until 2022 at the earliest. OEMs are also looking for legacy machines, some 20 to 25 years old, in order to remanufacture them to support smaller wafers. In short, all of the sudden, vintage equipment is a hot commodity.

 

[artis]

@nsaspook what you say is truly interesting. One thing I don't get. CPU's and IC's are in high demand and fluctuating that I can understand but stuff like power transistors of all sorts (BJT, MOSFET, IGBT, etc etc) I always thought that this market is rather stable given those devices are used in small part by DIY enthusiasts and in large part by manufacturers but the products they come in normally don't fluctuate like smartphones or computers. I'm talking about amplifiers, washing machines, power supplies etc.
So I cannot understand why all of a sudden the fabs that produced these items cannot do so anymore?

Is it the "toilet paper" thing, where everyone gets scared of the news and buys out all BJT's or FET's in all stores and leaves empty shelves and a exponential growth in demand?

 

[f95toli]

@nsaspook what you say is truly interesting. One thing I don't get. CPU's and IC's are in high demand and fluctuating that I can understand but stuff like power transistors of all sorts (BJT, MOSFET, IGBT, etc etc) I always thought that this market is rather stable given those devices are used in small part by DIY enthusiasts and in large part by manufacturers but the products they come in normally don't fluctuate like smartphones or computers. I'm talking about amplifiers, washing machines, power supplies etc.
So I cannot understand why all of a sudden the fabs that produced these items cannot do so anymore?

Is it the "toilet paper" thing, where everyone gets scared of the news and buys out all BJT's or FET's in all stores and leaves empty shelves and a exponential growth in demand?

I don't believe there is a single explanation.
However, two important factors that have contributed to why this is happening now are both due to COVID. The first is that COVID has affected production and supply chain for EVERYTHING over the past 18 months. In a economy that relies on "just in time " deliveries any disturbance will cause the "system" to stop working properly.
The 2nd reason is that more people have been stuck at home and have been spending much more money on "stuff" (and much less money on services) than they usually do, this has driven demand for not just phones etc but all type of consumer electronics and appliances. A somewhat related example is that prices on timber also sky-rocketed during the lock downs, partly due to production/logistics issues but also because demand went up a lot; people were spending more time at home and had money to spend on home improvement.

The 2nd reason has also been one of the main causes of the rising inflation and supply-chain issues that we've seen all over the world over the past few months (and is also the reason for the enormous profits reported by some online retailers): we are still buying more stuff and spending less on services than we usually do.

 

[anorlunda]

One thing I don't get.

You may have missed this very intelligent comment above:

Efficient economies are fragile economies

Couple that with this:

this has driven demand for not just phones etc but all type of consumer electronics and appliances.

JIT+efficient means no money is wasted on unnecessary things. Surplus capacity to take care of fluctuations in demand, can be considered unnecessary.

Another thing from above keeps bugging me.

At the same time, US-imposed sanctions on Chinese companies like Huawei, a leading manufacturer of smartphones and networking gear, prompted some Chinese firms to begin hoarding as much supply as possible.

The US and Europe are used to thinking that they can take actions such as the ban against Chinese Huawei with impunity and without negative consequences to themselves. In a JIT+efficient market, that may no longer be true. In JIT+efficient, any disturbance such as hoarding can trigger widespread disruption.

We might say that JIT+efficient is too risky and should not be allowed. OK, but who pays for the inefficiency and added security? Can we expect a chip fab in Taiwan, for example, to bear the costs of keeping surplus capacity just to protect world markets? Shouldn't the world be picking up the costs rather than private companies in a few countries? [My own business is the power grid,; intrinsically JIT. We keep about 20% spare electric capacity in reserve to protect against unforeseen needs. The cost of that inefficiency is spread among all power consumers. So the power grid is JIT but inefficient in that way, and we have a mechanism to finance the reserves.]

I don't mean to push this thread in a political direction. I don't even know if solutions are within the powers of any government or groups of governments. The global economy is evolving some unforeseen risks.

 

[artis]

Surplus capacity to take care of fluctuations in demand, can be considered unnecessary.

Well you already said it yourself. It's a good thing we don't run our grids like that and those that are run like that often fail when certain critical conditions are met like in Texas recently.
As for JIT I don't see whether that's a problem. Many things are just like that. Tap water, electricity, trains, buses.

Anyway both of you guys @anorlunda and @f95toli are right, people sitting at home making Jeff Bezos rich basically as companies like Amazon have really gone through the roof with this pandemic.
And sure given how risky a fab business is I'm positive no one would want to keep extra capacity around just in case. Don't want to sound boring and old but maybe not being able to switch to the next phone while the previous one doesn't have a scratch is a good thing...
For me personally these shortages don't change anything , by the time I will buy something new I'm sure they will have ended. As for manufacturers, well bad luck.

 

[nsaspook]

@nsaspook what you say is truly interesting. One thing I don't get. CPU's and IC's are in high demand and fluctuating that I can understand but stuff like power transistors of all sorts (BJT, MOSFET, IGBT, etc etc) I always thought that this market is rather stable given those devices are used in small part by DIY enthusiasts and in large part by manufacturers but the products they come in normally don't fluctuate like smartphones or computers. I'm talking about amplifiers, washing machines, power supplies etc.
So I cannot understand why all of a sudden the fabs that produced these items cannot do so anymore?

Is it the "toilet paper" thing, where everyone gets scared of the news and buys out all BJT's or FET's in all stores and leaves empty shelves and a exponential growth in demand?

I've been in the fab business for 30+ years and it's always been a roller-coaster. Part of the problem is over-booked demand that fabs know will likely never get invoiced for actual money. Limited capacity production lines have been rebalanced for critical cash paying customer semiconductors that's left a hole for other devices as inventory has been used up.

The next down cycle usually happen just about the time all the new capacity comes on line. Mature second-third tier fabs have stayed in business by being ultra-conservative with capital and manufacturing capacity because they've seen the big boys like Intel spend billions during booms have empty buildings during down cycles.

https://semiengineering.com/end-in-sight-for-chip-shortages/

At present, mature process nodes in both 200mm and 300mm fabs are tight, if not sold out. “In the last few years, there has been a surge in demand for a wide variety of chips that are made on 200mm and mature CMOS technology nodes ≥28nm whether that be on a conventional CMOS, bipolar CMOS DMOS or RF-SOI based process platforms. These devices include MCUs, PMICs, digital display driver ICs (DDICs), RF ICs, and the image signal processing (ISP) wafers needed to fabricate backside illuminated CMOS image sensors. This demand is also underpinned by technical trends in several market segments,” said David Haynes, managing director of strategic marketing at Lam Research.

“The supply issues for automotive ICs are well documented, but at the same time there is increased demand from consumer products, new 5G enabled devices and display applications,” Haynes said. “The situation is further compounded as many IDMs and foundries that make these chips make not one but several of these products. Historically, they have been able to rebalance fab capacity to address increased demand for a certain product type, but when demand for so many products are surging at the same time, it’s difficult or impossible to flex output in this way. Although there have been increases in global capacity for some device types, for example display drivers, recent reports suggest that the overall industry is yet to attain supply-demand parity.”

 

[dlgoff]

Thanks all. You all have been very helpful.

Again, thanks all. Lots of info to absorb.