The ongoing automotive chip shortage is reportedly having ripple effects throughout the industry. Samsung is reportedly concerned that problems in one area of the semiconductor market could spill over into others.
The problem is that there’s not enough chip capacity to go around, according to the Financial Times. Automakers have lobbied governments and chip manufacturers for help worldwide. TSMC has pledged to expedite orders for auto manufacturers, and other foundries across the world are likely making similar vows. That company’s statement on the topic is relevant to Samsung’s concerns: “While our capacity is fully utilized with demand from every sector, TSMC is reallocating our wafer capacity to support the worldwide automotive industry.”
TSMC has previously indicated it was converting some manufacturing to respond to additional demand in the automotive sector. But the fact that its capacity is fully utilized means the foundry is playing a game of musical chairs as far as who gets allocation priority on which product lines. Automotive chips aren’t typically built on leading-edge process nodes, but the nature of the semiconductor shortage has caused shortages across the entire industry.
TSMC’s Q2 2020 revenue, with additional data on revenue by node.
Samsung is specifically concerned that it won’t be able to deliver new phones on time because foundries will be too busy building chips for other companies, including the automotive industry. Foundry shortages could squeeze the smartphone industry by limiting the number of devices available in-market. Samsung is particularly exposed in this scenario: It’s both the largest smartphone manufacturer in the world, the largest DRAM manufacturer, and the largest NAND manufacturer. If smartphone supplies are limited, Samsung will eat the hit in three separate ways.
The fear of an automotive slowdown has led governments to put an unusual amount of pressure on TSMC, according to the report. Companies in the US, Japan, and Europe have reportedly engaged in direct talks with the foundry, as well as raising the issue with Taiwan’s government.
“We believe that as economies are struggling due to the pandemic, governments, especially in the countries hit worst by the virus, see car demand as a rare growth impulse important for their overall economies,” an unnamed Taiwanese official told the Financial Times. “We would not normally see this kind of approach if it were only about a few individual companies.”
The reason we’re in this mess in the first place, ironically, is that the market for cars bounced back faster than expected. During the pandemic, TSMC reduced the capacity it allocated for vehicle production after auto sales cratered. Now that vehicle sales are ticking up again, auto manufacturers need that capacity back. Problem is, it’s still in use producing everything else.
ExtremeTech suspects that companies will soon start talking about semiconductor shortages easing in June or July rather than the March-April timeframe that’s been floated recently. AMD has already indicated it expects supply to remain tight through this time frame, and it’s not the only TSMC customer that’s going to be supply-limited.
Pre-built gaming systems remain the best way to get your hands on a new AMD Ryzen 5000, Radeon, or Ampere GPU. It’ll be interesting to see if Rocket Lake picks up any customers on the basis of being easier to find in-stock. Auto manufacturers haven’t made any dramatic business moves in response to the ongoing supply problem, at least not yet. Hopefully, the demands of various markets can be met without destabilizing any specific market.
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