How shortages of a $ 1 chip sparked a crisis

Wu says the pandemic drove such strong demand that manufacturing partners can’t make enough display drivers for all the panels that go into computers, televisions and game consoles — plus all the new products that companies are putting screens into, like refrigerators, smart thermometers and car entertainment systems.

There’s been a particular squeeze in driver ICs for automotive systems because they’re usually made on 8- inch silicon wafers, rather than more advanced 12inch wafers. Sumco, one of the leading wafer manufacturers, reported production capacity for 8- inch equipment lines was about 5 000 wafers a month in 2020 — less than it was in 2017.

No one is building more mature- node manufacturing lines because it doesn’t make economic sense. The existing lines are fully depreciated and fine- tuned for almost perfect yields, meaning basic display drivers can be made for less than a dollar and more advanced versions for not much more. Buying new equipment and starting off at lower yields would mean much higher expenses.

“Building new capacity is too expensive,” Wu says. Peers like Novatek Microelectronics, also based in Taiwan, have the same constraints.

The shortfall is showing up in a spike in LCD prices. A 50- inch LCD panel for televisions doubled in price between January 2020 and this March

That shortfall is showing up in a spike in LCD prices. A 50- inch LCD panel for televisions doubled in price between January 2020 and this March. Bloomberg Intelligence’s Matthew Kanterman projects that LCD prices will keep rising at least until the third quarter. There is a “a dire shortage” of display driver chips, he said.

Aggravating the situation is a lack of glass. Major glass makers reported accidents at their production sites, including a blackout at a Nippon Electric Glass’s factory in December and an explosion at AGC Fine Techno Korea’s factory in January. Production will likely remain constrained at least through the northern hemisphere summer this year, display consultancy DSCC co- founder Yoshio Tamura said.

On 1 April, I- O Data Device, a major Japanese computer peripherals maker, raised the price of its 26 LCD monitors by ¥ 5 000 on average, the biggest increase since they began selling the monitors two decades ago. A spokeswoman said the company can’t make any profit without the increases due to rising costs for components.

All of this has been a boon to Himax’s business. Sales are surging and its stock price has tripled since November.

But the CEO isn’t celebrating. His whole business is built around giving customers what they want, so his inability to meet their requests at such a critical time is frustrating. He doesn’t expect the crunch, especially for automotive components, to end any time soon.

“We have not reached a position where we can see the light at the end of tunnel yet,” Wu said. — Reported by Debby Wu and Takashi Mochizuki, ( c) 2021 Bloomberg LP