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Where Did the Chips Go?

Posted September 20, 2021 in News

Written by John Shea III, Xpanxion Technical Writer

Computer Chip

The Scramble is on to Make Your Own 

Harvard Professor Willy Shih, in an interview in The Verge, says ”It’s not a problem that the bulk of the chips are short. It’s just some of them. And the “some” varies depending on the time of day, the week, the month and whatever, and what other people are buying. So it’s that problem, where we’re having these shortages that are preventing manufacturers from building the product. If you are a product manufacturer, you often talk about, is this product clear to build? Do I have all the components I need to build it? And that’s where we’re seeing the troubles now, because one chip is short or several chips are short.”

First you have to design a chip which takes time to figure out where all the transistors will go in the space and layers provided. That’s the software design prep for the programming. Sometimes you can get pre-built chips with their own blocks code ready to go. For the hardware side, the actual chip, you have to send the design to a fab (fabricator) lab. 

In Asia, it takes about 3 years to get a fab up and running (1st year put up structure, 2nd year fill with expensive equipment, 3rd year start fabrication runs) for about $10-$15 billion or more, whereas in the US it takes about 50% to twice as long to get one up and running due to the pre-permitting and hearings that take place. It’s a different mentality between the hemispheres. 

Chips are silicon wafers. The wafers come from slicing silicon crystals. Then the wafers are lithographically etched with extreme ultraviolet light achieved by vaporizing tin and focusing the laser light with mirrors that are down to an atom smooth. The chips are then transferred to the various circuit boards to the various companies needing them depending on how they are used: phones, computers, cars, etc. 

So, why the shortage? 

In October 2020, there was a fire in a major Japanese fab, COVID-19 struck and reduced the workforce, the Texas Freeze of February 2021 shut down the NXP and Samsung plants in Austin (it takes a while to get back up and running when the power is off), in March 2021 another fire in a Japanese fab that made chips for automobiles, upcoming government sanctions caused companies to double order or hoard—All these contributed to the shortage. 

So what do you do in a shortage if you can’t get the basic chips you need? 

Redesign your product to use the chips you can get or build your own chip manufacturing fab which takes time. Or you can move closer to where the innovation is going on and build your fab there. Oh, and fabs need lots of water to use in the manufacturing. In Taiwan they have an ongoing drought. In the US, some fabs are going up in the Arizona desert with the promise of water coming from the Colorado river, which is at its all-time low right now. Water will be rationed. Build where the electricity is made. The price varies throughout the US. 

No Chips, No Products, No Sales 

General Motors had to shut down their assembly lines for two weeks because of the shortages, although Ford says its managing its chip shortage better. Toyota will reduce production by 40%. US manufactures will produce 1.28 million fewer cars this year. Drive by some car sales lots once brimming with selections and find them empty. Any car you do find is much higher in price than it was a year ago. New appliances, all dependent on chips, are in short supply because of the shortages. Their prices are high, too. When COVID-19 struck, the chips shifted to personal laptops and gaming consoles but try and find a PS5 right now. 

We’ll improve our stakes in the US. The Biden plan for $52 Billion for semiconductors is just a start. There are companies in Asia who have a 35-year head start. The do-it-yourself initiative has Apple, Amazon, Facebook, Google, and Tesla are among the many going around the already established semiconductor firms. In the build-it-yourself arena, Intel invests up to $95 billion in their own European chip-making facility. Sambanova Systems, an AI-based company, is designing its own chip. 

Get on board. It’s going to be a bumpy ride as different companies vie to get their own chips to market for their specific products before the competition gets theirs out the door, off the fab floor, and into production. It will be a staggard crossing of the finish line if they can make it that far. 

If you can wait a while, the situation will level out. You should be able to get some bargains but for now, it’s supply vs. demand with the supply chain suffering. 

__________________

Nilay Patel, "Why the global chip shortage is making it so hard to buy a PS5", Aug 31, 2021, Accessed, September 17, 2021 


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