The companies that develop and manufacture have become expert jugglers in this great circus that today has the whole world on edge. The search for new Asian and US suppliers, which still handle part of the remaining stock with prices that do not stop growing, added to the uncertainty of delivery dates by factories, are some of the many problems that day day by day they are mutating in this “every man for himself”. It seems chaotic, doesn’t it? and it is, because more challenges are coming up for this year 2022 to be solved by the manufacturers of finished products.
Let’s look at the problem from the point of view of the final consumer, What is the impact you are experiencing? Are you really perceiving what is happening? Is the increase in the final price of a technological product significant?? And the truth is that there is a great ignorance of the subject; the impact of delivery delays or price increases are hardly understood and related to the semiconductor crisis.
The worldwide shortage of microcontrollers has had far-reaching effects on the manufacturing and economic growth of many electronic security companies. But without a doubt, the worst crisis is observed in the world’s largest automobile manufacturers, which have had to close factories and cut production due to the lack of semiconductors necessary for the normal operation of the vehicle, causing losses of billions of dollars due to to late deliveries, despite strong demand.
Automakers are bracing for a prolonged headache, semiconductor lead times have lengthened and prices have risen. This shortage of microcontrollers has also spread to the security industry, which is experiencing sustained growth rates year after year. Production chains that are interrupted causing delays in deliveries and price increases in final products. During 2021, it is estimated that in Latin America the prices of finished security products have increased in dollars between 15 and 20%, an unusual situation considering the stability of the last two decades, where even decreases in prices were observed sale of certain products that make up the different families of electronic security.
How is this great crisis being resolved? Semiconductor manufacturers around the world began an unprecedented race to increase production capacity. But the millions of dollars that are being invested are not yet paying off. The plants won’t start mass production until at least 2024, so it won’t help solve the immediate shortage.
Setting up a factory in Japan is the recent expansion plan for the largest Taiwanese player in the market TSMC, which today has 51,000 employees worldwide, controlling the printing of silicon wafers with a market world share of 50%. Construction of the new plant will start this year and mass production by the end of 2024, meanwhile TSMC expects its production capacity to remain tight.
At the beginning of 2021, the company committed to investing US$100 billion in this new plant with the development of new technologies. In addition, TSMC is building another US$12 billion chip factory in Arizona and expanding production capacity in Nanjing China, according to The Wall Street Journal.l.
As we discussed earlier, the new factories won’t be operational for the next few years, but the investment promises to boost U.S. manufacturing’s presence in advanced chipmaking after decades of ceding ground to Asian locations like Taiwan, South Korea and China. .
The geopolitical war raises the stakes for governments, particularly in the United States and Europe, to reduce their reliance on Asian suppliers, and this has triggered a wave of record investment in microprocessors and prompted governments to offer financial incentives to secure these chips. new factories.
But the US still has some problems, the costs of owning a new chip factory are about 30% higher than in South Korea, Taiwan or Singapore, and up to 50% more than in China, according to the report. of the SIA.
Global chipmakers are projected to spend $146 billion in total capital spending this year, about 50% more than before the pandemic began and double the level of just five years ago, according to consultancy Global Gartner. inc.
Technology advances and does not stop. The world of semiconductors is measured in nanometers. The smaller the transistor, the newer and more advanced the process technology, and the greater the number of microcontrollers that can be made on a single silicon wafer. Chips made using the 28-nanometer process or larger are generally considered legacy chips, with higher numbers indicating older technology. Chips made using smaller nanometer processes are considered advanced, with the most advanced chips being produced on single-digit nanometer processes.
A 5-nanometer wafer for advanced chips, which allow apps to run on the latest smartphones like the iPhone 13, sells for around $17,000 and this price compares to about $3,000 for a 28-nanometer wafer. for “legacy” semiconductors that perform simpler functions, such as connecting devices to Wi-Fi networks.
The installation of “clean rooms”, necessary to ensure that the chips remain free of impurities, can cost 500 million dollars. A single photolithography machine, used in chip designs on a silicon wafer, can fetch $150 million. Even process control equipment can add up to $10 million each. The latest planned factories may contain dozens of these machines.
It is not difficult to conclude that without microprocessors the speed of progress in the global economy will slow down and strong capital investment will be key to ensuring that the supply recovery holds strong over the next two years. In the meantime, we will have to wait for the normalization of the situation, continue to resist some price increases, manage delays in deliveries and wait for the problem in world logistics to be regularized, again lowering some costs that today are having a negative impact on product prices. finished.
Simultaneously, Electronic security supply companies will have the great challenge of increasing their efficiency in merchandise dispatches, using information technology more aggressively, analyzing more data and forecasting purchases to supply their clients in a timely manner. For their part, buyers should be attentive to the evolution of the world crisis during this year, work with planned stocks and take into account possible price increases that may occur during 2022.
Undoubtedly, the way is to accompany the crisis, minimizing as much as possible the negative impact that it may cause in each of our businesses.
Diego Madeo is the executive director of Garnet Technology, a leading company in the design and manufacture of home security products.
by Diego Madeo
