Tuesday , June 15 2021

The shortage of this chip for one dollar caused a global crisis – El Financiero

To understand why the semiconductor industry is in crisis for $ 450 billion, we need to start with a small piece called a display controller that costs one dollar.

The global silicon industry consists of hundreds of different types of chips, among the most impressive are those from Qualcomm and Intel, which range from 100 to more than $ 1,000 each. These chips They have powerful computers or a shiny smartphone in your pocket. In contrast, a display controller This is everyday life, its sole purpose is to convey basic instructions for lighting the screen of your phone, monitor or navigation system.

The problem for the chip industry, as well as for companies outside of technology, such as automakers, is that there are not enough drivers for everyone. Companies that force them not to keep up with growing demand, so prices have risen sharply.

This contributes to supply shortages and rising costs for LCD panels, components needed to make TVs and laptops, as well as high-end cars, airplanes and refrigerators.

“It’s not possible. If you have everything else, but you don’t have a display controller, you won’t be able to create your product,” said Stacy Rasgon, a semiconductor manufacturer at Sanford C. Bernstein.

Currently, the crisis in a few seemingly insignificant parts (such as energy management chips) has spread to the global economy. Carmakers such as Ford Motor, Nissan Motor and Volkswagen have already cut production, causing the industry to lose more than $ 60 billion this year.

Also read: “Very strange”: Volkswagen says that the renaming to “Voltswagen” was just a joke

The situation is likely to get worse before it gets better. A rare winter storm in Texas has destroyed the remnants of American production. A fire at a key plant in Japan will stop the installation for a month. Samsung Electronics warned of a “serious imbalance” in the industry, while Taiwan Semiconductor Manufacturing said it could not keep up with demand, despite the fact that its plants have more than 100 percent capacity.

“I’ve never seen anything like it in the last 20 years since our company was founded,” said Jordan Wu, co-founder and CEO of Himax Technologies, a leading supplier of display drivers.

The chip crisis was born out of a miscalculation when a coronavirus pandemic occurred last year. When COVID-19 began to spread from China to the rest of the world, many companies predicted that people would cut costs as they struggled.

“I cut out all my predictions. I used the financial crisis as a model, “says Rasgon.” But the demand was really tough. “

People trapped at home started buying technology and continued to buy. They bought better computers and bigger screens to work remotely. They gave their children new laptops for distance learning. They bought 4K TVs, game consoles, milk frothers, deep fryers and immersion blenders to make life in quarantine more enjoyable. The pandemic turned into a widespread Black Friday.

The problem affected automakers. During the blockade, they closed their factories and demand fell because no one could approach the outlets. At the same time, they told suppliers to stop shipping components, including chips, which are becoming increasingly important for cars.

Later, at the end of last year, demand began to recover. People wanted to get out and did not want to use public transport. Automakers have reopened plants and worked with chipmakers such as TSMC and Samsung. Your answer? In turn. They couldn’t make chips fast enough to meet the needs of their customers.

Jordan Wu of Himax is in the midst of a storm in technology. Recently in the morning of March, a 61-year-old man with glasses agreed to meet at his office in Taipei to discuss the deficit and why it is so difficult to solve. Wu was eager to speak, as the interview was scheduled for the morning when Bloomberg News requested it, with two members of his staff joining in person and two others coming by phone.

In 2001, Wu founded Himax with his brother Bean-Sen, now the company’s president. They started with the production of controller chips, as they are known in the industry, for laptops and monitors. In 2006, they went public and grew with the computer industry, expanding to smartphones, tablets and touch screens. Its chips are now used in dozens of products, from phones and TVs to cars.

The bottleneck is that these mature chip production lines are coming to an end. Wu says the pandemic has created so much demand that manufacturing partners can’t create enough display drivers for all the panels that go to computers, TVs and video games, as well as all the new products that companies exhibit. Displays such as refrigerators, smart thermometers and car entertainment systems.

Wu explained that Himax could not force more display drivers to put more pressure on their workforce. The company develops display controllers and then manufactures them in a foundry like TSMC or United Microelectronics. Its chips are manufactured using a technology called “mature node”, equipment at least a couple of generations behind advanced processes. These machines etch lines in silicon with a width of 16 nanometers or more, compared to cino nanometers of high quality chips.

There is a particular limitation on IC drivers for automotive systems, as they are typically made on eight-inch silicon wafers rather than on more advanced 12-inch wafers. Sumco, one of the leading plate manufacturers, reported that the production capacity of 8-inch equipment lines was approximately 5,000 plates per month in 2020, which is less than in 2017.

All this has benefited the Himax business. Sales are rising, and the price of its shares has tripled since November.

However, the CEO is not celebrating. His business is to provide customers with what they want, so his inability to meet their requests at such a critical time is unpleasant for him. He does not expect the crisis, especially for automotive components, to end soon.

“We have not yet reached a position where we can see the light at the end of the tunnel,” Wu said.

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