“As the shortage of semiconductors intensifies, it is inevitable to raise the prices of old, home appliances, and smartphones.

Input 2021.01.15 11:05

Global semiconductor supply shortage, such as automobiles and PCs, continues this year
Market research firm “There is no way to dramatically increase supply right now”
NXP “Severe shortage of chips, inevitably increasing prices for all products”

The global semiconductor supply shortage, which began last year, is dominated by the prospect that this year will continue, and consumer prices for electronic devices such as automobiles, home appliances, and smartphones are also likely to rise. It is analyzed that a rise in chip prices due to the semiconductor ‘defective phenomenon’ will soon lead to an increase in consumer product prices in a situation where the supply cannot meet the demand for chips.

On the 14th (local time), the Wall Street Journal (WSJ) said, “Because of the Corona 19 crisis, major companies such as servers, mobiles, PCs, and automobiles are not receiving as much semiconductors as necessary. In the future, consumers will have to pay more for new cars and new electronics this year.”

Such a shortage of semiconductors began in the fourth quarter of last year, led by automakers. According to the New York Times (NYT), last year, foundry companies that consigned semiconductor production focused their main production lines on games, PCs, home appliances, and servers in preparation for Corona 19, which started the supply shortage.

Automakers that were pushed out of priority were unable to produce due to shortage of semiconductors. Toyota recently shut down its production lines in China, and FiatChrysler (FCA) temporarily shut down its plants in Ontario and Mexico. Ford has also shut down its Kentucky plant for a week, and Honda has announced that it will shut down its plant to assemble the popular model Civic in the UK for at least four days.

The shortage of semiconductors is not limited to the automotive industry. “There is no room in production capacity across the semiconductor industry,” said Ristto Fuhaka, president of VLSI Research, a market research firm in the United States. “I said.

Nvidia, the world’s largest graphic processing unit (GPU) company, is also unable to provide supply to meet demand. It is highly likely that this will affect the PC market and cause an increase in graphics card prices. This means that consumer prices for desktops and notebook PCs may increase. Earlier, it was reported that NXP, one of the world’s largest automotive semiconductor companies, also told its customers in November last year that “due to a severe chip shortage, all product price hikes are inevitable.”

Meanwhile, as the demand for overall data centers such as games, streaming services, and online commerce is increasing due to Corona 19, semiconductor consignment production (foundry) companies such as TSMC and Samsung Electronics are also under load. TSMC, the world’s number one foundry company, plans to expand its production capacity through large-scale investments this year, but considering that it takes at least one year to establish a semiconductor plant, it is difficult to provide an immediate solution.

The bigger problem is that there is virtually no way to dramatically increase semiconductor supply. WSJ cited industry experts, and even if semiconductor companies are investing in facilities to produce cutting-edge chips such as 5G and artificial intelligence (AI), it will be difficult to meet the demand, and even semiconductor factories with relatively outdated technology will have existing orders He said it was a difficult situation to match.

Market research firms such as VLSI Research predict that the semiconductor supply shortage will continue throughout the year. This is because of the characteristics of the semiconductor industry, which has a longer production cycle than other electronics industries. In general, in the case of a foundry plant, it costs at least 10 trillion won to build one line, and it takes at least one year for a series of processes, from setting up a factory site, putting in equipment, and starting a test.

In addition, in the case of chips required for cutting-edge technologies such as automotive semiconductors, 5G, and AI, unlike memory semiconductors, it is difficult to have a mass production system, so it is difficult to dramatically increase the supply in a short period of time. This is also the reason why semiconductor companies and customers sign supply contracts every six months to several years.

An expert in the semiconductor industry who asked for anonymity said, “In the semiconductor market, Samsung Electronics and SK Hynix’s profits increased significantly due to a sharp increase in prices, mainly for memory semiconductors, in 2018. While memory has turned weak from the first half of 2020, System semiconductor sales increased due to demand,” he explained. “This year, the overall price increase is inevitable regardless of memory and system semiconductors.”