Semiconductors have been making headlines recently, primarily because chipmakers have been unable to make enough devices to satisfy demand. Headlines like these are common: “Until 2023? Parts shortage will keep auto prices sky-high,” “The global chip shortage is starting to hit the smartphone industry,” and “Why the global chip shortage is making it so hard to buy a PS5.”
J.P. Morgan reports that lead times (order to delivery) for semiconductor devices have risen from an average of 13.5 weeks at the beginning of 2018 to 20.2 weeks in July 2021. Anecdotally, parts that used to be available from stock or within six weeks are now quoted with 52-week lead times.
Reasons for the shortage are many. The Covid-19 pandemic has certainly played a role, when society transitioned to working from home and learning from home, increasing the demand for laptops and other consumer electronics. Also hindering chip supplies was a fire at a Japanese chipmaking plant and a winter storm that closed chip factories in Texas, both of which occurred earlier this year. Further complicating the issue are logistics problems related to skyrocketing shipping costs. The BBC reports that it now costs $17,000 to send a 40-foot container from Asia to Europe—a more than tenfold increase over pre-pandemic levels. But as early as February 2020, before the extent of the pandemic was well understood and lockdowns took hold, Semiconductor Engineering was reporting on the possibilities of chip shortages, particularly of devices manufactured in 200-mm fabs.
To address the shortage, semiconductor manufacturers are working to add capacity. To do that, they will have to invest in equipment. SEMI forecasts that global sales of semiconductor manufacturing equipment will surpass $100 billion in 2022 after jumping 34% to $95.3 billion in 2021, up from $71.1 billion in 2020. SEMI divides 2022’s record-setting total into $86.89 billion for wafer-fab equipment (up from $81.7 billion in 2021 and $61.20 billion in 2020), $8.03 billion for test equipment (up from $7.58 billion in 2021 and $6.01 billion in 2020), and $6.39 billion for assembly and packaging equipment (up from $6.01 billion in 2021 and $3.85 billion in 2020). SEMI expects that device makers’ continuing investments will fuel the expansion of both frontend and backend semiconductor equipment segments.
As chipmakers work to expand capacity, governments, too, are considering initiatives. The U.S. Congress is working on funding for the CHIPS for America Act, which could unlock $52 billion in semiconductor incentives and research funding. SEMI has urged Congress to act on the funding and to pass the Facilitating American-Built Semiconductors (FABS) Act, a bipartisan measure introduced in June, which would create a permanent and effectively refundable 25% tax credit for equipment and facilities to produce semiconductors and semiconductor tools. Also in June, the U.S. and European Union announced the formation of the Trade and Technology Council (TTC), intended, in part, to support secure supply chains for semiconductors and to promote green technology. The CHIPS Act, FABS Act, and TTC could ultimately result in the U.S. and E.U. having a larger role in chip manufacturing, but for 2021, SEMI projects that Korea, Taiwan, and China will remain the top three destinations for equipment spending.
Even as chipmakers add capacity and face supply-chain disruptions and higher input costs, the shortage will enable them to retain robust pricing power even as capacity expands, according to J.P. Morgan. The Semiconductor Industry Association forecasts that global industry revenues will reach $527.2 billion in 2021, a 19.7% increase from the 2020 total of $440.4 billion.
Ironically, as chipmakers move to expand their production capacity to alleviate the semiconductor shortage, the providers of the equipment the chipmakers will need to purchase for their expansion are hindered by the same chip shortage. To overcome this problem, AMETEK Programmable Power engineers are engaging in redesigns as necessary to use alternative, available components to maintain the production of programmable power supplies and other products for customers expanding their frontend and backend semiconductor manufacturing operations.
AMETEK Programmable Power offers a variety of programmable power supplies for semiconductor applications, including the Sorensen SGX Series air-cooled power supplies, which offer high power density (up to 15 kW in a 3U chassis and up to 30 kW in a 6U chassis). The SGX Series serves a wide variety of applications, ranging from electroplating to fuel-cell simulation. For semiconductor applications, it offers the reliability and stability required for vacuum deposition/sputtering, ion implantation, and burn-in and test. The water-cooled ASD FLX offers even higher power density—up to 30kW from a 3U chassis—and it can serve in frontend semiconductor manufacturing operations for which an air-cooled solution might not be suitable because of environmental issues.
For more on these and other topics, see AMETEK Programmable Power’s new white paper, Reliable, Stable Programmable Power Drives Advanced Semiconductor Equipment, and a related infographic on programmable power supplies.