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CHIP SHORTAGE NEWS Global chip shortage 2023 - updates in November

From Luke James 7 min Reading Time

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How are companies responding to the chip shortage and what are policymakers commenting? Here we sum up the most important events related to the global shortage of microchips. The article is updated continuously.

The global chip shortage emerged in 2020 and is an ongoing problem where the demand for integrated circuits such as computer chips is greater than supply.(Source: Quardia Inc. - stock.adobe.com)
The global chip shortage emerged in 2020 and is an ongoing problem where the demand for integrated circuits such as computer chips is greater than supply.
(Source: Quardia Inc. - stock.adobe.com)

Intel cancels planned expansion into Vietnam

Intel has shelved its planned investment into Vietnam, a move that would have nearly doubled the company’s presence there, in a blow to the country’s growing ambitions for a booming chips industry. Vietnam is home to Intel’s largest factory for assembling, packaging, and testing chips, and had been banking on the company’s further expansion there.

The country is keen to position itself as an alternative to China and Taiwan, especially after Joe Biden announced deals to support Vietnam's chips industry during a visit in September. Shortly after this visit, however, U.S. officials informed a select group of U.S. businessmen and experts that Intel had shelved an expansion plan, one of the participants in the meeting told Reuters. This decision, according to the anonymous source, had been made in July.

Japanese chipmaker Rapidus to launch operations in Silicon Valley

Japanese chipmaker Rapidus is set to launch operations in Silicon Valley by the end of March, its CEO said in mid-November, as it seeks to expand its sales network in the United States in anticipation of demand growth. CEO Atsuyoshi Koike said that Silicon Valley is critical for the development of its next-generation chips due to its ability to provide access to customers.

Rapidus hopes to begin mass-producing its advanced chips in 2027 and is currently building a plant in Chitose, Hokkaido, while jointly developing semiconductors with IBM. Koike unveiled the plan at a meeting organized by the Japanese government of chip and AI firms in San Francisco.

Japanese industry minister Yasutoshi Nishimura said at the meeting, "It is critically important to boost the supply capacity of cutting-edge semiconductors, not only for achieving carbon neutrality but for ensuring economic security."

Nvidia to release three new AI chips for the Chinese market

Nvidia will release three new artificial intelligence (AI) chips for China, according to a recent report from Chinastarmarket, a state-affiliated news outlet. The news comes after the U.S. further restricted China’s access to advanced semiconductors in October.

Nvidia has reportedly developed the new AI chips based on designs from its flagship H100 product, with Chinese firms expected to take delivery by the end of November. The company suffered a significant stock decline after the Biden administration increased efforts to prevent advanced chips from entering Chinese markets, including restricting the sale of AI processors.

Products targeted in recent restriction efforts include Nvidia’s A800 and H800 series which were tailed for Chinese firms after U.S. officials introduced restrictions on AI accelerators for China in 2022.

Samsung’s narrow losses give hope that chip shortage could be nearing its end

Chipmakers have had a difficult few years with the ongoing chip shortage but a series of recent earnings from chipmakers show that the market might be about to change.

South Korean electronics manufacturer Samsung, for example, recently reported narrow losses of US$2.7 billion in its semiconductor business for the three months ending September, compared to US$3.2 billion in each of the first two quarters of the year.

Overall, the South Korean conglomerate generated quarterly revenue of $49.95 billion, primarily from new smartphone releases and higher sales of its premium display products. Still, the figure is lower than the $56.88 billion reported this time last year.

Samsung isn’t the only chipmaker that’s forecasting a recovery. Fellow Korean chipmaker SK Hynix reported $1.62 billion in quarterly losses, less than the previous quarter’s loss of $2.2 billion. The firm credited “strong demand” for AI for the improved performance in its latest quarterly report.

Semiconductor equipment firm to create 50 new jobs at new facility

ACM Research, a specialist semiconductor manufacturing equipment company, has said that it will create 50 new jobs at its new Hillsboro sales and service office, as the firm seeks to boost its operations in North America.

ACM’s tools clean, polish, and electrochemically plate silicon wafers. Silicon wafers serve as the platform upon which most chipmakers build semiconductors. ACM’s competitors include Lam Research, which has a large factory in Tualatin.

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While ACM’s headquarters are in Silicon Valley, the company primarily operates in China, which is home to its factories and research facilities.

ACM’s new 11,000-square-foot Hillsboro site will include offices, warehouse space, and a cleanroom used as a demonstration lab where prospective customers can evaluate the company’s manufacturing tools.

Texas Instruments begins construction on Utah facility

Texas Instruments has broke ground on its new 300-mm semiconductor fabrication plant in Utah. Joined by Utah Governor Spencer Cox and other state and local elected officials, Texas Instruments President and CEO Haviv Ilan celebrated the first steps towards the construction of the new facility in early November.

"Today we take an important step in our company’s journey to expand our manufacturing footprint in Utah. This new fab is part of our long-term, 300-mm manufacturing roadmap to build the capacity our customers will need for decades to come," said Ilan.

Texas Instruments announced its US$11 billion investment in Utah in February, which is the state’s largest-ever economic investment. Once complete, the new fab will create approximately 800 direct jobs and thousands of indirect jobs, with the facility’s first chips expected to roll off production lines in 2026.

Toyota reports record global sales as chip shortages ease

Japanese automaker Toyota has reported a significant year-on-year increase in its global sales and production for the first half of FY2024, attributing this rise to the easing of semiconductor shortages.

According to an announcement made at the end of October, the Japanese auto giant experienced record highs in both sales and production from April to September 2023. Toyota recorded worldwide sales of 5,596,183 vehicles, while production stood at 5,738,126 during the period.

Compared to the previous year, which saw the global market grappling with the impact of the COVID-19 pandemic and semiconductor shortages, Toyota’s performance in the first half of FY2024 has far exceeded expectations.

“We will continue to carefully monitor the parts supply situation and make every effort to deliver as many vehicles as possible to our customers at the earliest date,” the company said in the announcement.

U.S. Labor Department pushes chip-sector talent development

The U.S. Department of Labor used the 2023 National Apprenticeship Week to highlight events around the country that promote registered apprenticeships in advanced manufacturing. Apprenticeships help to broaden "the pipeline of talent ... beyond those who can pursue postsecondary education," says Mike Russo, president and CEO of the National Institute for Innovation and Technology.

According to a recent joint report by the Semiconductor Industry Association and Oxford Economics, the U.S. semiconductor industry will add almost 115,000 jobs by 2030. The same report, however, estimated that 80% of projected technical jobs risk going unfilled.

Tools used in chip manufacturing are highly sophisticated, so demand will be most acute for advanced technicians with "skills in the electrical connectivity of these machines, the mechanicals, the air, the chemicals that go through" them, said Arizona State University professor Binil Starly.

Big players in the semiconductor industry are currently getting behind initiatives to help alleviate potential skills shortages. Intel, which began construction last year at its newest U.S. manufacturing site in Ohio, has committed $50 million in grants to local universities and community colleges for semiconductor education programs.

Vietnam eyes its first semiconductor plant

Vietnam has held talks with chip companies with the aim of boosting investment into the country and possibly building its first chipmaking fab, two business executives said in early November.

Vietnam, which is a Southeast Asian electronics manufacturing hub, already hosts Intel’s largest semiconductor packaging and testing plant, and is also home to several chip designing software firms.

Meetings with more than half a dozen U.S. firms have taken place in recent weeks, with an unnamed executive claiming that potential investors include GlobalFoundries and Taiwan’s PSMC. “We do not comment on market rumors," a GlobalFoundries spokesperson said when asked about subsequent contacts.

Vietnam’s government has said that it wants to build its first fab by the end of the decade and has commented that chip companies would benefit from “the highest incentives available in Vietnam”.

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