CHIP SHORTAGE NEWS The global semiconductor crisis: A review of Q3 2024

Related Vendors

KOA Europe GmbH

CISSOID S.A.

Heraeus Electronics GmbH & Co. KG

Although the chip shortage crisis seems to be over for now, potential supply constraints in 2025, combined with Europe’s semiconductor challenges, could trigger another shortage, especially if global demand rebounds.

Semiconductors are the building blocks of modern technology, forming the foundations for everything from simple electronics to electric vehicles. When the pandemic hit in 2020, however, it sent the entire industry into a flurry as supply chains were suddenly disrupted and consumer demands shifted.

This led to what was a very turbulent few years between 2020 and 2022 where supply constraints consistently hit automotive and electronics manufacturers, causing significant production bottlenecks and cutbacks. This was especially problematic for the automotive sector where manufacturers worldwide struggled to meet demand for new vehicles due to a lack of chips for safety-critical systems.

In the last year, however, things have begun to stabilize. There was a market rebound in late 2023 and although the outlook is still challenging, positive signs are pointing towards the end of the shortage. In many ways, it’s already over.

Since we last reported on the shortage in June of this year, however, there have been a few updates worth noting for the potential impact they could have on the wider chips market in the medium to long term.

CHIP SHORTAGE NEWS

The global semiconductor crisis: A review of Q2 2024

More U.S. export controls against China

The United States rolled out fresh export controls on quantum computers and semiconductor-manufacturing equipment on Thursday, September 5, amid concerns about the use of advanced technologies by rivals such as China. The U.S. Department of Commerce said that the export restrictions followed consultation with international partners and would strengthen relations with “like-minded countries”.

“Today’s action ensures our national export controls keep step with rapidly evolving technologies and are more effective when we work in concert with international partners,” Under Secretary for the Bureau of Industry and Security Alan Estevez said in a statement. “Aligning our controls on quantum and other advanced technologies makes it significantly more difficult for our adversaries to develop and deploy these technologies in ways that threaten our collective security.

The Netherlands followed suit shortly after, announcing tighter controls on exports of semiconductor-making machines. “We see that technological advances have given rise to increased security risks associated with the export of this specific manufacturing equipment, especially in the current geopolitical context,” Dutch Foreign Trade Minister Reinette Klever said in a statement.

Concerns about a second semiconductor shortage

Key players in the automotive and semiconductor industries are warning of a potential semiconductor shortage in 2025 or 2026, particularly affecting mature nodes (40 nanometers and above). While significant investment is going into advanced chip production (5 nm, 3 nm, and smaller) due to the demand for high-performance, energy-efficient chips in sectors like consumer electronics and data centers, mature nodes remain essential for industries such as automotive and industrial. This underinvestment in mature nodes could lead to a supply gap.

The semiconductor industry has faced fluctuations in demand, with an overcapacity risk in 2023 due to reduced orders from sectors like mobile phones. However, a resurgence in demand, especially in the automotive sector, could reignite supply constraints by 2025. Automotive chip inventories are expected to be low by 2024, and the growing demand for electric vehicles in Europe, driven by stricter emissions regulations, could worsen this issue. S&P Global Mobility warns that the supply chain for mature nodes remains vulnerable.

Analog chips, which rely on mature nodes, are expected to become a bottleneck for automotive production as demand increases across industries, particularly mobile phones and electric vehicles. Additionally, price pressures from automotive chip manufacturers on suppliers may complicate the situation further. If other industries with higher profit margins ramp up their chip orders, automotive companies may once again struggle to secure sufficient supply, similar to the challenges faced in 2020.

CHIP SHORTAGE NEWS

The Global Semiconductor Crisis: A Review of Q1 2024

Intel scales back European expansion plans

In an unexpected blow to the European chips market, U.S. chipmaker Intel announced that it was delaying the building of a $32 billion manufacturer site in Magdeburg, Germany, as well as a plant near the Polish city of Wrocław.

In a message to employees, CEO Pat Gelsinger said the plans will be paused for two years “based on anticipated market demand” and lower-than-expected global demand for semiconductors. This pause is part of Intel's larger drive to save US$10 billion in costs, after reporting a US$7 billion loss in its manufacturing unit and a 31 % revenue decline in 2023.

This announcement followed just days after Poland’s government announced European Commission approval to provide more than 7.4 billion zloty (€1.7 billion) in state aid for Intel’s Polish plant. Polish Deputy Prime Minister Krzysztof Gawkowski had expressed optimism about the investment, calling it the largest in decades and a boost to the country's technological and economic development. "Semiconductors in Poland will guarantee both better economic development and greater security," he said, underscoring the strategic importance of the project.

The delays in both Poland and Germany represent a significant blow to Europe’s semiconductor ambitions and give credence to fears of a second semiconductor shortage that may be lingering. The delays could have serious repercussions for Europe’s ability to compete in the global semiconductor race. Other regions, such as the U.S., China, and South Korea, have rolled out extensive public support schemes to attract chip manufacturers.

So, while the semiconductor shortage as we knew it between 2020 and 2022 seems to be over, the general situation is far from perfect and it may only be a matter of time before we start seeing a renewed shortage unless Europe can pick up the pace.

Power Electronics in the Energy Transition

The parameters for energy transition and climate protection solutions span education, research, industry, and society. In the new episode of "Sound On. Power On.", Frank Osterwald of the Society for Energy and Climate Protection Schleswig‐Holstein talks about the holistic guidance his organization can provide.

Listen now!

(ID:50177870)