British chip design firm Sondrel has warned about problems in chip packaging, revealing that package lead times have increased to 50 weeks or more, up from about 8 weeks previously.
Packaging plants were hit hard by order cancellations in the early days of the Covid-19 pandemic and had to lay off staff or even close down. As silicon production surges, they are grappling with a surge in orders for their existing capacity, but they're not avoiding the problem of stretched lead times.
“The order of bookings at various stages in the supply chain has completely changed. Previously, designs were sent to wafer production, which still took about 12 weeks. At the same time, packaging details would be sent to packaging companies for in-silicon production. Be ready before," said Alaa Alani, packaging supervisor at Sondrel. "The new schedule means that package designs must be completed and booked 20 weeks or more before final silicon designs to ensure silicon and package come together at the right time."
Not realizing this and planning accordingly can delay chip production by as much as 40 weeks.
In Sondrel's view, one way to minimize latency effects is to start SoC package planning and design by assigning die bumps and assigning their x/y coordinates relative to the die corners. Moving this stage earlier in the supply chain sequence avoids massive and costly delays.
Chip delivery time is extended, MCU and PMIC bear the brunt
According to Bloomberg, wait times for semiconductor deliveries increased slightly to a new high in March after China’s lockdown and an earthquake in Japan further hampered supply.
Lead time -- the delay between chip ordering and delivery -- increased by two days last month to 26.6 weeks, according to research by Susquehanna Financial Group.
While chip users are once again facing longer wait times, lead times are growing at a much slower pace than in 2021, when many industries were forced to cut production due to a lack of critical components.
Lead times have increased for most chip types, including power management, microcontrollers, analog and memory, according to a report by Susquehanna analyst Chris Rolland. The war in Ukraine, the Covid-19 lockdown in parts of China and the earthquake in Japan "will have short-term effects in the first quarter, but may have lingering effects on severely constrained supply chains throughout the year," he said.
The global semiconductor shortage began in the first half of 2020, driven by pandemic-driven consumer technology and automotive demand. Semiconductor makers have cut back on investments to increase factory output, and a sudden shortage of chips has disrupted production of everything from smartphones to pickup trucks. It also fuels inflation by raising the cost of supply.
Chip industry executives have warned that some customers will struggle to get enough supplies until 2023. Companies like Intel Corp. have massively ramped up construction of new factories, most of which won’t come online until next year at the earliest.
ASML warns of two more years of shortages facing chipmakers
Chipmakers face a two-year shortage of critical equipment.
On Monday, according to the Financial Times, one of the most important suppliers to the chip industry, Peter Wennink, CEO of Dutch company ASML (ASML), said that the chipmaker's multi-billion-dollar expansion plans will be affected by the next two years. Critical equipment shortages are limited as the current supply chain struggles to speed up production.
Wennink said:
There will be shortages next year and the year after. We will ship more machines this year than last year, and we will ship more machines next year than this year.
But if we look at the demand curve, that's not enough. We do need to increase capacity by more than 50%, and it will take time.
ASML's machines are used to etch circuits on silicon wafers. "It's the most critical company in the semiconductor supply chain, the printing house for silicon chips," said Richard Windsor, technology analyst at Radio Free Mobile.
Wennink also noted that ASML is working with suppliers to evaluate how to increase capacity, but it is unclear how much investment will be required.
His remarks come as the chip industry accelerates investment in new products in response to a global shortage of chips and a surge in demand.
Analysts expect the industry's market size to double to $10 trillion by 2030.
Intel said last week it would invest about 33 billion euros in manufacturing and research in Europe. Over the next ten years, depending on demand, the investment will increase to 80 billion euros. The company also announced plans to invest $40 billion to expand its chip-making operations in the United States.
The United States and Europe also plan to spend tens of billions of dollars to support chipmakers.
Intel CEO Pat Gelsinger acknowledged that equipment shortages pose a challenge to the company's expansion plans. He was in direct contact with Wennink about the supply shortage, and Intel has sent its own manufacturing experts to the company to help speed up production.
"It's a constraint today," Gelsinger told the Financial Times, but stressed that there was still time to resolve the issue. It takes two years to build a building for a chip factory, "and then in the third or fourth year, you start to have enough equipment."
Wennink agrees that there is still some time to expand capacity in the supply chain, as many new production facilities will not be commissioned until 2024. but it's not easy
