Chipmaking Machines Now Impacted by Chip Shortage

As the global shortage market stretches into its third year, few have remained immune to the impacts and residual effects of the inflated demand and constant supply chain disruptions. Now leading chip manufacturers, who are attempting to respond by increasing their capacity and production, are experiencing a new stress on their output—they don’t have the chips to produce the machines required for the global supply of chips. This catch-22 scenario is yet another blow to the industry and may further perpetuate the time needed for the market to recover and rebalance.

Buying new chipmaking machines has never been a speedy process, given their complexity and delicacy. Prior to the pandemic, chipmakers typically measured lead times for the machinery in months, however, now they are seeing lead times stretching out as long as 2–3 years.

Doug Lefever, chief executive of Advantest America Inc, said, “typical lead times on our machines, which test whether newly made chips function correctly, have doubled or more. These testing machines use some 250,000 parts, and a hiccup in supplies of just a handful can cause delays.” (WSJ)

This situation also applies to lithography tools. The world’s largest maker of these scanners is warning that only 60% of orders for deep ultraviolet (DUV) litho machines can be fulfilled. They simply need more capacity, chips, and extra time to build in order to meet demand.

As a response to this newly identified roadblock to recovery, chip manufacturers around the globe are treating chip-equipment suppliers as priority customers. While many argue that this “multiplier effect” is vital to easing the shortage quickly, it extends the chip production delay for other growing industries.

The United States alone uses 25% of the world’s chips, however, they build less than 12% of that supply. Chip manufacturing is an expensive and complex process to establish. A chip fabrication plant can take more than three years to build and come online. Disruptions and delays within the transportation and freight sector, along with difficulty securing the necessary chips and technology to build more machines, and the extreme market prices have left the supply chain even more vulnerable.

Converge keeps a watchful eye on the many layers of the supply chain, including chipmaking machinery and the impacts it has on our customers’ supply chains. We have the relationships, market intelligence, and product expertise to respond to urgent needs and dynamic market conditions and provide our customers with long-term growth, visibility, resiliency, and sustainability.

Contact your Converge representative today and learn more about current conditions and solve the future.

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