「Out of stock」
For the majority of digital enthusiasts, this may be the most familiar word in the past two years. No matter what goods you buy, most of the people who come into your eyes are two big words "out of stock". Microsoft Xbox Series X and Sony PlayStation 5, which cost thousands of dollars, there is no trace of GeForce RTX 30 series graphics cards, and even the automotive industry has begun to have the problem of stalled deliveries.
Why is this happening? The reason is still the disaster caused by the "lack of core". In the past two years, the "chip famine" has become more and more intense like the "butterfly effect", in addition to the new crown epidemic in the previous year, the snowstorm in Texas in the first half of last year and the power outage in Taiwan, the sudden emergence of the Opichron epidemic in the second half of last year also made the problem of chip shortage more prominent.
2021 is undoubtedly a frustrating year for consumers. For the chip industry, 2021 is a year of danger, hidden vitality and hope. Taking this opportunity, let's review the various "missing core" events that have occurred in the past year, analyze the reasons for the continuous shortage of chips, and look forward to the impact of the "lack of core tide" on the future of the global market.
In 2021, the global core is missing
Since the fourth quarter of 2020, the global wave of core deficiency starting from the consumer electronics field has swept all industries, according to a research report released by Goldman Sachs, more than 169 industries around the world have been greatly affected by chip shortages, including mobile phones, computers, TVs, automobiles, industrial, smart homes, home video game consoles and other industries are all missing cores. It seems that "whether the core is missing" is no longer a problem, and the lack of serious or not serious is the real problem.
Automotive industry
What people did not expect was that this "lack of core" that lasted for several years actually began to blow from the automotive industry.
At the beginning of 2020, a sudden new crown pneumonia epidemic became the fuse of the global "lack of core". Affected by the epidemic, at that time, the upstream and downstream industrial chains of the automotive industry were pessimistic about the prediction of the automobile market, and car companies also lowered their sales forecasts for the whole year and proposed production reduction demand to foundries. At that time, the market research agency generally expected that the automotive industry would be seriously affected by the epidemic, and world car sales would be reduced by nearly 30% in 2020, and it would not recover in the short term.
Unexpectedly, after the epidemic was controlled to a certain extent, global car sales began to rebound rapidly. According to the China Association of Automobile Manufacturers, China's total automobile sales in 2021 were 26.1 million units, an increase of 3.1% year-on-year. Among them, the sales of new energy vehicles were 3.4 million units, an increase of 1.5 times year-on-year. Stimulated by demand, the production capacity of car companies has recovered significantly, but the chip production capacity has not kept pace in time. As a result, there was a "mismatch" phenomenon between cars and chips, which also opened the curtain of "shortage tide".
Entering 2021, first the Volkswagen Group announced that due to the lack of core production of 100,000 vehicles, global sales will fall to less than 9 million vehicles in 2021; then Toyota also announced that the company in Japan, the United States a number of car factories into the production of production, the time from 2 days to 4 days, directly caused by the loss of nearly 10,000 vehicles production capacity. In addition, GM, Ford, Honda, Toyota, Great Wall and other first-line manufacturers have also been affected by the lack of cores, and there have been different degrees of production cuts, even Weilai has been affected, in March 2021, it announced that the Hefei Jianghuai plant was out of production for 5 days due to lack of cores.
According to statistics, as of October 2021, global automobile production has been reduced by 9.345 million vehicles due to the lack of cores. Due to the shortage of chips leading to a relatively tight car supply, in 2021, dealers in many places across the country have narrowed the mode of preferential treatment, extended the delivery cycle, and even the situation of "one car is difficult to find", which has also led to the occurrence of the phenomenon of "price increase" in disguise for individual models this year.
In order to cope with the current tight market situation, many companies have expressed their willingness to spend high prices to obtain chips, but most of them still have not grabbed the products they need. What's more, Mercedes-Benz and BMW have also launched a "fare buyback" policy because of the shortage of existing cars, even if there are various additional conditions, but this operation is indeed unprecedented, which also reflects how serious the chip shortage is today.
Mobile phone industry
After entering 2021, the "lack of core" is no longer a trouble for Huawei's mobile phone company. In early March last year, there were foreign media broke out of the fierce material, affected by the "lack of core tide", qualcomm has been difficult to meet the chip needs of android mobile phone manufacturers, Qualcomm's chip product delivery date has been extended from the previous 25 weeks to more than 30 weeks, and even some mobile phone manufacturers may not be able to buy.
In the context of Huawei's supply cut, global Android mobile phone manufacturers are scrambling to seize Huawei's vacated market, additional orders, crazy inventory, just in order to take advantage of this opportunity to play their own brands out, rubbing the rapid recovery of the smart phone market. Who knows that people are not as good as the sky, the semiconductor industry suddenly appeared chip shortage, the real self, glory, Millet mobile phone executives have said that affected by chip supply, a number of hot models are in a state of shortage.
Qualcomm not only cut off the supply of high-end chips, but also seriously insufficient low-end chips, and the shortage of mid-range chips has hindered the production of low-end mobile phones of many manufacturers. In order to cope with the shortage of Snapdragon 780G, Xiaomi Mi 11 Youth Edition even launched a version equipped with two different Snapdragon mid-range processors. It can be seen that Qualcomm's "lack of core" is indeed an indisputable fact.
Android is not good, and Apple is not. Back in April, Apple's chief financial officer, Luca Maestry, warned that Apple could lose billions of dollars in the fourth quarter due to chip shortages. At Apple's earnings meeting in the fourth fiscal quarter, Cook personally admitted that due to chip shortages and the impact of the epidemic in Southeast Asia, iPhone and overall sales were not as expected, and Apple lost about $6 billion in the fourth quarter, and the market value was surpassed by Microsoft.
The problem is, it is reasonable to say that Apple has a strong control over the supply chain, even TSMC's wafer production capacity will be given priority to Apple, Apple should be the least affected by the lack of core mobile phone manufacturers, why is it still difficult for Apple to solve the dilemma of lack of cores? The answer is very simple, the problem is not apple A15 chips, but a lot of peripheral chips that have not attracted attention in the past.
To assemble an iPhone, in addition to the core SoC, nearly 100 kinds of peripheral chips such as communication baseband, connection chip, touch chip, screen driver chip, wireless charging chip and power management chip are also needed. The Samsung plant in Texas, which makes screen drivers for Apple, was shut down for weeks at the beginning of last year due to blizzards and power outages, and Murata, a supplier of chip capacitors for Apple, began to shut down production and cut production in the middle of last year due to the surge in the Olympic coronavirus epidemic, which has become the norm in Apple's supply chain, eventually leading to insufficient capacity for many electronic components and chips.
According to foreign media NIKKEI Asia, Apple's iPhone and iPad assembly lines suffered a multi-day shutdown in October due to the impact of the shortage of these peripheral chips, an emergency that has never occurred in the past decade. Affected by this, Apple's iPhone 13 production in October this year was about 20% worse than its target, and Apple was forced to lower the total iPhone 13 production target from 95 million units to 83 million to 85 million units.
Computer industry
The impact of the chip shortage on the computer industry can almost be said to be devastating. Although both Nvidia and AMD released their latest graphics cards at the end of 2020, both manufacturers struggle to ensure sufficient supply to meet consumer demand. Affected by virtual coin mining and chip shortages, today's graphics cards have been described by players as "worth more than gold" gadgets, and the graphics cards produced by the two manufacturers have been sold for thousands of dollars higher than their retail prices in the market, which is simply not affordable by ordinary consumers.
Of course, graphics cards aren't the only PC hardware out of stock. According to Research Research, the shortage of components that began in the second half of 2020 has led to a 20%-30% gap between current orders (end demand) and actual shipments (supply). This is also why after entering 2021, the price of memory, graphics card, and CPU has risen, and the price increase of memory has even reached nearly 100% at one time.
Graphics card shortage price increase, of course, can make graphics card manufacturers make a lot of money, but this will also affect the market performance of other game hardware, in order to form a strong performance of the game platform, in addition to graphics card, but also need processor, memory, motherboard, power supply and many other hardware support. The performance of many new products requires new graphics cards to reach the level they deserve. The tight supply of graphics cards will lead to a contraction in other hardware shipments, which will have a systematic impact on the entire computer industry chain.
With the shortage of graphics cards due to various reasons, many PC gamers try to switch to the game console circle, but they still can't avoid the lack of cores caused by the lack of game consoles. Due to the shortage of semiconductors and other components, Sony announced that the supply shortage of its sub-era console PlayStation 5 will continue until next year, although Microsoft did not announce, but Xbox Series X / Xbox Series S two products are also out of stock, the price was once speculated to more than 6,000 yuan.
Interestingly, in Nintendo's recent earnings conference, in response to the global shortage of chips, Nintendo CEO Shuntaro Furukawa said that Nintendo has enough semiconductors to help us survive the current Switch production period, so the "lack of cores" has no impact on the production of the Switch for the time being. According to the year-end statistics of the divination network, Switch's sales data in 2021 is actually brighter than that in 2020, and it seems that hoarding chips in advance is indeed an effective means of coping.
Why do chips continue to be out of stock?
Xiao Lei believes that the reasons for the lack of cores in the entire industry last year are mainly the following three points:
1. Affected by external factors, chip production capacity is tight
First of all, even if the new crown epidemic improves slightly, the chip production environment in 2021 is still not optimistic. The cold wave in the United States, the power outage in Taiwan, the outbreak of the epidemic in Southeast Asia, and the subsequent negative events have caused the factories of various chip manufacturers to fall into a state of suspension of work and production, and this situation continued until late September.
In addition to factory shutdowns, labor shortages and raw materials are key. The Institute of Printed Circuits (IPC) reported in late September that nearly 80 percent of manufacturers were having difficulty recruiting the right workers as a result of the pandemic. Renesas Electronics Group President and CEO Indo Shibata also said at a meeting at the beginning of last year, "The current supply of materials is very tight, such as silicon wafers and polysilicon materials have supply problems, not just chip production problems." If there is not enough material, it is useless to simply increase the capacity. ”
2. After the demand recovers, the relationship between supply and demand is unbalanced
In the first half of 2020, due to the impact of the new crown epidemic, there has been a sharp decline in all walks of life around the world, especially in the automotive, mobile phone, consumer electronics and so on. The decline in sales of these products has caused some manufacturers in the industry to fall into pessimism, adjust sales forecasts, and put forward production cuts to foundries to avoid the negative effect of excessive inventory overstock.
What many people do not expect is that the spread of the new crown epidemic has indeed affected the development of offline physical industries, but it has also catalyzed the demand for home work, and the demand for electronic products such as computers, tablets, TVs and other related electronic products has rebounded rapidly. Affected by this, upstream manufacturers have tried to add orders that were previously cut, but chip manufacturers have no excess capacity. One out and one in, each enterprise naturally scratched its head.
The underestimation of the recovery of market prosperity by various companies has led to the inability of wafer chip upstream companies that need to do capacity planning from six months to one year earlier to adjust and increase production capacity in time, which is another direct reason.
3. The supply chain is deeply rooted, resulting in a mismatch in production capacity
The semiconductor supply chain is an industry with a very long "reaction arc", and foundries need to carry out long-term planning for user orders to ensure the balance between supply and demand.
In the past few decades, the market environment has been relatively stable, the global supply chain has been coordinated seamlessly, and the supply of chips can naturally be guaranteed. The sudden surge in demand has caused the wafer foundry to fall into a state of full production in an instant. The full production of the foundry is transferred to the upstream equipment manufacturers, and then transmitted by the equipment manufacturers to the upstream parts manufacturers, resulting in the delivery time of some parts being extended from the original 1-2 months to half a year. Insufficient supply upstream, which in turn passes on to downstream, further exacerbates the shortage of goods in the electronics industry.
In addition, the slow pace of expansion of mature processes is also a major reason for the shortage of chips in this round. In recent years, whether it is the rapid growth of cloud computing, 5G RF device demand, or the rapid popularization of the concept of the Internet of Things, or the intelligent transformation of the automotive industry, all of them have provided a strong impetus for the development of mature processes. The demand is greater, and the pace of expansion is slow, which will naturally show a mismatch between supply and demand.
In 2022, will the lack of core continue?
2021 has passed, and all that remains is chicken feathers. In the upcoming 2022, what will happen to the chip industry? Will the "lack of core tide" continue, and what impact will it have on other industries?
1. Investment and expansion, it is difficult to stop the lack of core
Investment and expansion will be the main theme of chip manufacturers in 2022. If there is no accident, in order to solve the capacity problem, many foundry companies will start to build new factories and expand the capacity of existing factories. As shown in the figure, at present, whether it is the international manufacturerSMC, UMC, GROFOUNDRY, SK Hynix, or the local manufacturer SMIC have plans to expand production capacity, it is expected that the expansion capacity will increase the existing production capacity by 25%, which is amazing.
(Source: IC Trading Network)
The question is, can this solve the chip problem? The answer is no. Ordinary consumers may feel that there is only a lack of advanced process chips on the market, and in fact, almost all categories of chips in all walks of life are facing the problem of shortage of goods.
Bao Sanhua, manager of Foxconn's global procurement office, once said, "At present, in addition to the relatively stable price curve of RF PA, including analog ICs, power ICs, logic ICs, discrete devices, and sensors, memory are undersupplied, resulting in different degrees of price increases, especially in analog ICs MCU, Power Stage, and ASIC/ASSP Audio, MOSFET and PC DRAM are the most scarce." ”
The root cause of this problem is that fab capacity cannot keep up with demand, especially 8-inch wafer capacity is particularly short. Industry insiders believe that although various manufacturers are expanding production capacity, but the new production capacity is expected to be put into use in 2-3 years, 8-inch wafer manufacturing is expected to be difficult to alleviate in the first half of 2022, and the chip shortage in the early stage such as the vehicle-grade MCU will continue to remain in short supply.
2. Domestic chip manufacturers benefit
With the continuous escalation of international competition in the field of science and technology in recent years, domestic substitution is becoming the key focus of the development of the chip industry. Last year's "lack of core tide" has attracted the attention of relevant state departments, and the "14th Five-Year Plan" released in the first half of 2021 has clearly stated that high-end chips are "urgent needs and long-term needs of the country", and integrated circuits are "the basic core areas related to the overall development and national security".
Under the guidance of the "lack of core" storm and national planning, in 2021, domestic car giants such as Great Wall, Wuling, BAIC, Geely, and SAIC have joined the army of "core". In February last year, SAIC Motor announced a comprehensive strategic cooperation with the domestic smart chip unicorn company Horizon, the United Nations chip manufacturers to create independent autonomous driving chips, and other car companies also began to actively form effective interaction with domestic chip companies.
In addition to automotive chip manufacturers, domestic wafer foundries and chip designers are expected to profit from this "lack of cores". According to the bidding data of the past 5 years, the proportion of Chinese mainland equipment bidding has continued to increase, and the domestic substitution rate of equipment has shown an upward trend. From the perspective of capacity expansion, local companies have steadily increased capital expenditure under the stable demand growth, and are expected to add 29 new fabs in the world by 2022, while Chinese mainland account for 8, ranking first.
The explosive growth of chip demand in various fields and the active participation of various enterprise giants are conducive to forming effective interaction with domestic chip companies and stimulating the potential of domestic chip companies to achieve further breakthroughs in technology. It is foreseeable that domestic chips are about to usher in the opportunity to exert force in the second half of the "lack of core tide", and will further accelerate the localization of various basic chips. But at the same time, it is worth noting that the independent research and development of chips in technology and cost requirements are higher, the current majority of domestic chips in a certain degree of high power consumption problems, to solve the chip shortage problem can not be achieved overnight.
3, price increases, out of stock, is still the main theme
The result of the imbalance between supply and demand in the market is an increase in prices.
In the case that the "lack of core tide" will continue, the premium situation in the consumer electronics market may be difficult to improve. Take the personal attention of NVIDIA RTX 3070 graphics card as an example, this first price is only 3899 yuan graphics card, now the e-commerce platform is generally sold to about 6000 yuan, even in the second-hand platform to more than 5000 yuan, it is expected that this situation will continue this year, DIY market will continue to be in a trough state.
The situation for home consoles is also not good, and recently, Sony Interactive Entertainment announced that it will continue to produce the previous generation of game consoles PS4 until the end of 2022 to help cope with the lack of PS5 production caused by global supply chain disruptions. Xiao Lei himself has also tried to snap up the PS5 several times in recent times, but all of them have failed. From this point of view, the shortage of home game consoles is expected to continue this year.
For gamers, the best option for 2022 should be the gamebook. At the turn of the year, laptop manufacturers are releasing prices to meet the new generation of processors and mobile graphics cards. Considering that 2022 is still missing cores and materials, and there is also a bottleneck in the latest DDR5 4800MHz memory production capacity, I personally think that users who have demand for games may wish to choose to get on the car at this time, otherwise they are likely to relive the "grand situation" of tens of thousands of people snapping up a laptop in the middle of last year.
As for the automotive industry, as things stand now, a number of automakers have begun to establish partnerships with various suppliers, for example, Volkswagen has made it clear that it wants chipmakers to establish closer relationships, and Ford is forging partnerships with GlobalFoundries to secure future supplies. Traditional automakers who have experienced 2021 want to deal with chip shortages by tightly controlling their supply chains, and perhaps only time will tell us how effective they will be.