By Patrick Schmidt
Normally I use my monthly blog assignment to relate a quirky analogy, tell a tall tale, or even inform readers about the joys of Minnesota’s seasonal swings. But now that my lawn has dried out and temperatures have reached normal averages, talking about the weather can take a back seat. This week, we are going to talk about a topic that, just like the weather, seems to be around for good and on everyone’s mind – chip shortages.
I have addressed this topic before and offered some ideas about how to make it through until supplies loosened. However, as I continue to read the news about the lack of available semiconductors, I accepted the chip shortage isn’t going away any time soon. Now, instead of a few months, in some cases we are looking at year or more lead time on items.
So, how tight is the supply? Let’s look at a few examples.
Most of us have heard that some automobiles built and shipped without features that we could do without for a while. Heated seats (another Minnesota thing) and rear climate controls were some of the first to go. We will miss them for a time, and many can be retrofitted later when supply improves.
But other features seem like table stakes for our mobile lifestyles. For Example, German auto manufacturer BMW is now shipping some cars without Android Auto and Apple CarPlay.
I can still remember the first time I rented a car with Android Auto, and I was able to project driving directions to the large screen in the dash. I felt like I had won the lottery. But is losing the feature really that big a deal? We are talking about a nice-to-have feature in a luxury car, not the safety system, right?
It isn’t just the nice-to-haves that are missing. Healthcare has been impacted as well.
Stephen MacMillan, CEO of Hologic, a company that has pioneered three-dimensional mammography technology, said in an interview that the chip shortage is impacting his company’s ability to manufacture life-saving technology. The supply is so tight that he and a group of other medical supply executives reached out to the federal government for help and Department of Commerce Secretary Gina Raimondo is getting involved.
So, the solution is to build new fabrication plants, right? Perhaps. But that is a long-term solution to a relatively short-term problem.
It is true that there are 72 fabrication plants being newly built or expanded. Close to home, Taiwan Semiconductor Manufacturing Company, Limited (TSMC), the world's largest contract chipmaker, is building a $12 billion plant in Phoenix, Arizona. That’s the good news. The bad news? Construction is apparently three months behind schedule and the plant will not produce its first 5-nanometer chips until March 2024 at the earliest.
Even if construction of other plants is ahead of the TSMC schedule, those builds may face another challenge – finding chips to put in the machines that make the chips. Yes, just like the fact that diamonds are cut with diamonds, semiconductors are built with machines that contain semiconductors. It’s a catch-22 that has even the chip manufacturers scrambling.
So, where do we find more chips in the meantime?
Peter Wennink, CEO of ASML Holding NV, a leading manufacturer of the photolithography systems used to produce computer chips, disclosed a surprising resource. He reported a major industrial conglomerate (whom he did not name) has resorted to buying washing machines and ripping the chips out of them to install in their own products. I never could have imagined an appliance chop shop, but here we are.
Now for a bit of good news – some manufacturers are adjusting priorities.
A few companies that supply chips are shifting their supply from consumer electronics to manufacturing systems so new chip foundries can go online as soon as possible. These actions won’t bring the shortages to an end in 2022, but we need the light at the end of the tunnel to be closer than mid-2024.
So this month, even though I don’t have a quirky analogy, tall tale, weather report, or even a story about a “free” hamster, I hope you have found this read useful. The chip shortage has shown us how interconnected and fragile our technological world can be. As a result, you may need to live without Bluetooth in your new car for a while. But, in the wise words of a pastor I once knew, “This too will pass.”
About the author
Patrick Schmidt is a Technology Lifecycle Management Specialist with LRS IT Solutions. For more than 23 years, he has been helping customers get a firm grasp on their asset and contract management with a combination of comprehensive service level analysis and lifecycle management best practices.