By Alan Patterson, EETimes (July 15, 2021)
When Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co. (TSMC), suggested to CBS journalist Leslie Stahl that the global semiconductor shortage may extend through 2022, Liu’s comment raised questions about the current steep ramp of new capacity to meet demand, the potential for rising chip prices and eventual oversupply.
Chip shortages and possibly over-exuberant capacity expansion come as planners in China and the U.S., recognizing that semiconductors are critical for economic growth, have launched projects to build local, integrated semiconductor supply chains.
The end of shortages in 2023 may be followed by overcapacity in 2024, according to worst-case scenarios offered by industry analysts interviewed by EE Times.
“It depends on how many gigafabs get built,” said Dan Hutcheson, CEO of VLSI Research, who predicts overcapacity by 2024, noting that governments tend to be heedless of the profit-maximization mantra that has driven the semiconductor industry in recent years.
“When you are government-funded, profit doesn’t matter to you. Your job is to gain market share. That will be the problem, probably with China,” Hutcheson added. There’s also the tendency for politics rather than market dynamics to drive decisions on capacity expansion. That’s what causes the gluts, Hutcheson said, noting a string of boom-bust cycles going back decades.
Demand for leading-edge chips at 7-nm nodes and below will remain tight over the next couple of years, according to Brett Simpson, senior analyst with Arete Research.
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