Report indicates global chip shortage may expand beyond consumer chips to include advanced processors for data centers.
The global chip shortage that has plagued the world for the past two years has so far primarily affected low-end chips, but semiconductor manufacturers now face production problems and equipment acquisition challenges that could extend the shortage to more advanced silicon used in next-generation smartphones and data center workloads. According to a report in the Wall Street Journal, the industry could see a shortfall of 20% by 2024 for the most advanced processors made today, with knock-on effects for industries relying on them, such as artificial intelligence, high-performance computing and autonomous vehicles.
Only two chipmakers — Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. — are capable of manufacturing such advanced chips, due to the technical barriers and enormous investments required. Samsung has reportedly been struggling with capacity constraints, unable to improve the production yield of its four-nanometer process chips as much as it had hoped. Nanometer is a measurement that refers to the size of the tiny transistors embedded into each chip; the smaller the transistor, the newer and more advanced the chip, and the greater the number of chips that can be made on a single silicon wafer. This lower-than-expected production yield has meant Samsung cannot supply customers such as Qualcomm Inc. and Nvidia Corp. with as many next-generation chips as they had ordered.
Kang Moon-soo, executive vice president of Samsung's foundry business, said on a conference call last month that the company had experienced some delays in ramping up four-nanometer chip yields, but insisted that it is now "back on the expected yield improvement curve," adding that it is also on track to begin mass-producing three-nanometer chips using a novel architecture this month. Unable to secure sufficient supply from Samsung, Qualcomm and Nvidia have turned to TSMC; however, the world's biggest chip manufacturer is also struggling to meet demand because of its inability to acquire the machinery it needs to build more efficient chips. TSMC Chief Executive C.C. Wei admitted in a conference call with analysts in April that the company has faced issues with manufacturing tool deliveries.
To address the equipment shortage, TSMC sent key executives to negotiate with equipment manufacturers, including talks with ASML Holding NV, a Dutch company that is the world's sole producer of critical machinery used to manufacture advanced silicon. The problem is that ASML itself reportedly has capacity issues, with demand for its systems outstripping its ability to deliver them to customers. ASML is attempting to help chipmakers squeeze more output from their existing machinery, but analysts say those efforts are unlikely to be enough to compensate for the lack of deliveries.
The situation has led chip design companies such as Qualcomm and Nvidia, which lack their own manufacturing capabilities, to issue warnings about future impacts to their businesses. In its most recent earnings call, Qualcomm said that maintaining leading chip manufacturing process technologies could result in lower yields in the future, impacting its bottom line. Nvidia CEO Jensen Huang said on a recent call that the company's supply chain would continue to be complicated for the foreseeable future.