‘Chip shortages could extend into next year’

Taiwanese panel supplier Innolux Corporation says the current chip shortages could last beyond this year, becoming the latest manufacturer to warn that competition for semiconductors may persist for some time.

"Supply at foundries is very tight. Capacity in the chip packaging and testing space is also tight," James Yang, president of the Foxconn affiliate, told analysts at an earnings conference on Wednesday. "The chip supply bottleneck could still remain unresolved in the first half of 2022."

Some chip packaging equipment now takes 11 months to ship, Yang said. Chipmakers aren't expanding capacity for 8inch wafers needed for power management chips and display driver integrated circuits, he added. Automakers and 5G smartphones both need power management chips so the overall supply is getting even tighter, the executive said.

Chip shortages are expected to wipe out $61 billion of sales for automakers alone and delay the production of a million vehicles in the March quarter, but the fallout now threatens to hit the much larger electronics industry. Possibly a broad spectrum of chipheavy products from cars to phones and gaming consoles could see shortages or price hikes.

About 3 to 5 per cent of total panel supply could suffer shipment delays, though the impact on

Innolux so far has been slight, Yang said. Panel demand will outpace supply this year, he added.

The first hints of trouble emerged in the spring of 2020. The world was in the early throes of a mysterious pandemic, which first obliterated demand then super-charged internet and mobile computing when economies regained their footing. That aboutface — in a span of months — laid the seeds for potentially the most serious shortage in years of the semiconductors that lie at the heart of everything from smartphones to cars and TVs.

“The virus pandemic, social distancing in factories, and soaring competition from tablets, laptops and electric cars are causing some of the toughest conditions for smartphone component supply in many years,” said Neil Mawston, an analyst with Strategy Analytics.