Now that we’re about six months into the ongoing semiconductor shortage, the periodic updates coming in about which companies will be eating delays and slowdowns next have taken on something of a routine air. This time, it’s Apple’s turn at the dunking trough.
Apple’s superior supply line management techniques have buffered it from issues to date, but the company is beginning to have problems sourcing certain low-level parts, according to Nikkei Asia. This dovetails well with a story in Bloomberg, recently, which discussed how a shortage in $1 display drivers is causing headaches everywhere. (In this context, a display driver is an integrated hardware circuit used to control and operate a display, not a piece of software.)
While we’ve focused on high-profile GPU and CPU shortages, these aren’t the components that are keeping the entire semiconductor industry bottlenecked. As Bloomberg writes, “People stuck at home started buying technology — and then kept buying. They purchased better computers and bigger displays so they could work remotely. They got their kids new laptops for distance learning. They scooped up 4K televisions, game consoles, milk frothers, air fryers and immersion blenders to make life under quarantine more palatable. The pandemic turned into an extended Black Friday onlinepalooza.”
This has direct relevance to a quote in Nikkei Asia:
“We really don’t see an end to this shortage, and things could be even worse, looking ahead to the end of the June quarter, as some smaller tech players could run out of some critical inventories to build their products and need to scale back production,” said Wallace Gou, president and CEO of Silicon Motion.
There’s no report that this will impact any specific Apple launches or next-generation products. For now, the impact is squeezing Apple but not its customers.
There Are Two Semiconductor Shortages, Not One
There are, effectively, two ongoing semiconductor shortages. One of them concerns leading-edge chips built by TSMC and Samsung. This is the shortage that’s affected gamers and PC enthusiasts the most. It’s the reason Ampere and RDNA2 GPUs, AMD CPUs, and both new consoles from Sony and Microsoft are difficult to find. This shortage is still related to some downstream bottlenecks in component production, but it affects the top-end semiconductor products shipping today.
The second shortage is in tiny chips built on mature process nodes. These are the $1 solutions Bloomberg is talking about, and they’re mostly built on older fab lines run with legacy 200mm fab equipment. The 200mm fab business was supposed to be practically moribund by now, which is why companies starting phasing the smaller wafers out about 10 years ago.
But the predicted production drop-off never happened. Instead of retiring 200mm capacity on old nodes, companies continued to use them. These foundry nodes are long since depreciated and fully optimized for building the underlying chips, which can cost less than a buck. Ramping up on new lines with greater capacity and larger wafer sizes would dramatically increase expenses. Equipment vendors have scrambled to catch up with this unexpected need for 200mm capacity, but since the need wasn’t anticipated, there was an inevitable delay baked into the process. The 200mm fab situation was running very tight even before the pandemic kicked in, as this February 20, 2020 story from SemiEngineering discusses.
Nikkei reports that Apple is delaying some component orders from H1 2021 to H2 2021, but that it hasn’t had to make consumer-facing changes to its business yet. It’ll be news if the company does, if only because Apple, with its hyper-optimized supply chain, has always been largely immune to this kind of trouble.
A consumer-impacting bottleneck at Apple, if one were to emerge, would emphasize just how unusual the current situation is. Much of the reason the auto industry finds itself up the proverbial creek without a paddle is that auto manufacturers attempt to avoid stockpiling parts at all costs, while the semiconductor industry is incapable of turning unprocessed wafers into finished chips in just a day or two. Combine long lead times with just-in-time inventory, and you’ve got a recipe for disaster. Toyota has managed to avoid the worst of the shortages because it mandates that suppliers carry inventory, but even Toyota has been somewhat affected by ongoing problems.
Current prognosis: midrange CPU shortage easing (Acer), GPU shortages worsening (MSI, Asus), with the general semiconductor shortage now forecast to potentially last into Q1 2022. Foxconn expects shortages to continue through Q2 2022, though the company isn’t forecasting an enormous impact on its own business.