Chip Shortage Making Chip Shortage Worse…

Chip Shortage Making Chip Shortage Worse…
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​It is a well-known fact inside and outside technology circles that the semiconductor industry is capacity constrained and despite significant plans to increase capacity, the industry remains constrained.  One point of contention for such expansion is semiconductor production and test equipment, where lead times have increased from 3 to 6 months in 2020 to 10 months in 1Q 2021 and to 14 months by July of last year, so while plans for semiconductor capacity expansion have been made and site construction has begun, the ability of semiconductor companies to actually begin production is getting pushed back by such equipment delivery issues, much of which is being caused by semiconductors themselves.
Producing semiconductor manufacturing and testing equipment requires a relatively small number of chips that represent ‘far less than 1% of the global semiconductor market’ according to Semi.org, however these chips are essential for the production of said equipment and must compete with higher volume semiconductors for existing fab capacity, with a similar problem facing the production of equipment used to produce raw wafers, without which capacity would remain constrained.  Among these absolutely necessary components of SME tools are FPGA (Field programmable gate arrays), sensors, power management ICs, A to D converters, and microcontrollers, but without such chips even the tools needed to produce them cannot be built, creating what is called the multiplier effect.
Examples given by SEMI.org are:

• A typical FPGA test tool requires approximately 80 FPGAs to build. However, that tester can then test about 320,000 FPGAs per year – a multiplier effect of ~4,000x.
• Process tools require about 100 FPGAs to build and can process 120 or more wafers per hour. Wafers make many passes through each tool during the manufacturing flow but the share of most tools’ contribution to overall production equates to at least 2 million devices per year – a ~20,000x multiplier.
• Optical wafer inspection tools require roughly 100 high performance computing (HPC) server chips to manufacture. Their multiplier effect can be ~30,000x and much higher.
• A typical MCU Tester needs approximately 100 FPGAs to be manufactured, but that tool can then test nearly 10 million MCUs in a year, a multiplier effect of ~100,000x.
• The U.S. Commerce Department has noted that MCUs are among the chips facing the most acute shortages.[4]  They are used in many key downstream industries including automotive. If we consider an example using a 100,000x multiplier effect for a tester and extend it to the automotive supply chain, assuming the number of MCUs required for auto manufacturing is ~100 per car, every tool/tester enables enough MCUs to build 100,000 cars

Fabs have to make choices as to how they allocate capacity and are under pressure to balance allocations across a number of essential industries, but for the semiconductor industry to expand and meet the supply challenges it is currently facing there has to be some system for prioritizing those chips that are necessary for the production of semiconductor and wafer production and testing equipment or all the capacity spending being allocated (86 new fabs slated begin production between 2020 and 2024) will be for naught and will remain idle.  While likely less profitable for fabs the multiplier effect shown above makes it essential that they recognize that allocating resources to these smaller, more specific products has an immense payback, despite the minor short-term effect.  Without that shift, the semiconductor shortage and its effect on the global economy will continue to drag on and limit the global growth characteristics that power the semiconductor industry long-term.