Dan Rozycki, president of a small engineering company, worries about what a global shortage of semiconductors could mean for concrete curing.
Rozycki’s company, the Transtec Group in Austin, Texas, sells small sensors placed where concrete is poured at high-rise, highway and bridge construction sites. Devices that measure temperature and send data wirelessly so computer workers can make sure the material is hardening properly.
Like many other things in the modern world, from computers and cars to cash registers and kitchen appliances, sensors that require a few inexpensive, popular semiconductors have suddenly become a commodity. very scarce.
“Each month our products are becoming more and more popular,” said Mr. Rozycki. “But we may not be able to do it for another few months.”
Semiconductors shortages, fueled by pandemic disruptions and manufacturing problems at multibillion-dollar chip factories, have caused shock waves in the economy. Questions about chips are causing a stir in both businesses and policymakers trying to navigate the world’s dependence on small components.
Chip supply constraints are no longer a new phenomenon. But problems in the past have often been related to specific types of chips, like those that store computer memory or process large amounts of data. This time, customers are also scrambling to find a range of simpler chips made in old factories. And those factories are very difficult to upgrade.
President Biden in February ordered a 100-day assessment of the semiconductor supply chain, a process that drew executives from 19 major companies to a virtual meeting on Monday. Congress has backed legislation aimed at promoting more domestic chip production to reduce dependence on Taiwan and South Korea, for which Mr Biden has proposed $ 50 billion in funding for his infrastructure plan.
Much of the attention focused on the temporary shutdown of major US auto factories. But the problem is affecting many other areas, especially the server systems and PCs used to provide and use internet services that have become important during the pandemic.
“Every aspect of human existence is put online and every aspect of human existence is on the internet,” said Pat Gelsinger, the new chief executive officer of chip maker Intel, who attended a meeting with the chairman on Monday. of which all run on semiconductors. “People are begging us for more.”
The chip shortage could affect any company adding computer or media features to its product. Many examples have been described in 90 comments submitted to Biden supply chain reviews by companies and trading groups, including lists of laundry needs from industry giants like Amazon and Boeing.
Personal computer giant HP says a shortage of semiconductors has prevented the company from meeting the needs of computers ordered by schools. The company said rising chip prices also made it more difficult to provide affordable hardware to less affluent school districts during a pandemic.
Mr. Rozycki’s engineering firm in Austin is currently one of the lucky chip users. It has pre-planned and has enough chips to continue making the roughly 50,000 sensors it supplies each year to construction sites. But his distributor warned him that it might not be possible to make more of them available until the end of 2022, he said.
“Will that put those projects on hold?” Mr. Rozycki asked. He is scouring the market for other distributors who may have the necessary two chips in stock. Other possibilities include redesigning the sensors to use different chips.
Supply issues have many similarities to the nearly $ 500 billion worth of semiconductors business. Manufacturers turn silicon sheets into chips in complex processes using expensive chemicals, gases, and machines. Finished chips cross national boundaries dozens of times for partners to package, inspect, and ship them to hardware manufacturers and distributors.
Shortages this year have been exacerbated by episodes including the fire of the Renesas Electronics chip factory in Japan, a drought in Taiwan and a cold spell in Texas that caused factories led by Samsung Electronics, NXP Semiconductors and Infineon operate.
Frank McKay, chief procurement officer of Jabil, a company that buys chips worth billions of dollars each year to assemble products for customers including Apple, Amazon, Cisco Systems and Tesla.
On any given day, he said, his company is facing a shortage of about 100 components and has to use all its negotiating power to get them – successful so far. “But it’s a roller coaster ride every day,” said Mr McKay.
Fixing other problems is likely to last until 2022. Mr. Gelsinger said Intel is talking to auto industry suppliers about moving some of their chip manufacturing operations to factories. old Intel, can be started in six to nine months. But adding new manufacturing tools to an existing chip factory could take a year. Building a new one took three years.
Thomas Caulfield, chief executive of GlobalFoundries, a major US chipmaker, is doubling down on capital spending this year to keep up with demand. long.
Currently, chip delivery schedules range from about 12 weeks to more than a year in some cases, said chip buyers and brokers. That’s bad news for companies like webcam start-up Wyze Labs.
“We’ll talk to you directly about some of the bad news we’ve received this week,” the company wrote in a client note in January. “Some of our key suppliers have informed us that they will only be able to supply about a third of the chips we need to make Wyze Cams.”
The Kirkland, Wash. Company, predicted problems delivering a third version of its flagship webcam. The company’s website says it was sold out, with inventory expected to increase in one to two weeks. Wyze did not respond to a request for further comment.
“Supply problems can be a sensitive topic,” says Zach Supalla, chief executive of Particle, a San Francisco-based company that buys chips for communication equipment and computers. It sells its equipment to thousands of companies that manufacture products such as hot tubs, air conditioners, and industrial and medical equipment.
So far, Particle has enough chips to continue making its products, he said. But the company is asking customers to pre-order more and more to make sure it can meet demand, Supalla said.
Once the chip can be found, the price difference can be very obvious. A special item without a sheath, a ceramic capacitor that usually sells for about 3 cents each, becomes difficult to find. when an outbreak of Covid-19 temporarily closed a factory in China.
The shortage of capacitors affects the production of a common cell modem. That modem, which typically sells for between $ 10 and $ 20, has risen to $ 200 on the spot market, Supalla said. Customers like auto companies may be willing to pay such payments to continue making $ 40,000 cars, Supalla said. But not all is possible.
Some buyers are skeptical of profiteers. Jens Gamperl, the chief executive of an online components exchange called Sourcengine, recounted a call from an executive that a chip typically costs $ 1 per chip listed by the exchange. sell for 32 dollars. Mr. Gamperl had to explain that his own company was forced to pay $ 28 for the division.
“That’s the kind of frenzy we see on the left and right now,” he said.
In addition to directly affecting hardware manufacturers, chip shortages can reduce shipments and increase costs for servers and network equipment to provide services such as online entertainment and learning. distance training and medicine. They can also affect software manufacturers.
Nanea Reeves, Tripp’s chief executive, said Tripp, a Los Angeles startup that makes a kind of meditation app that harnesses virtual reality headsets from Sony and others, is in the PlayStation 5 business. new software to increase demand. But a shortage of chips has hampered the launch of that console.
“We were expecting a bigger push from the PS5,” she said. The company hopes to have more consoles in the second quarter.