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A big hurdle to fixing the chip shortage: substrates

wsj.com

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Re: A big hurdle to fixing the chip shortage: substrates

#11

Post by avs733 »

nostrademons wrote: post #6
cronix wrote: post #4

Earlier quoted context omitted.

Let's say that all Banana growers were shut down for 8 months and during that time all existing supply was bought up that were sitting on store shelves. After they were allowed to start growing again, how long until you see a Banana in your local store? You better be there when they arrive, because everyone else who has been wanting Bananas is waiting too. On top of that, can the Banana grower even get all of the ite…

Also imagine that there are no truck drivers to drive the bananas from the plantations to your local stores, and no ships to bring fertilizer to the banana plantations. Even when they start growing again, it's going to be a while before you can get one. Supply chains in general are in shambles. We had mass COVID outbreaks at the ports that shut down unloading, as well as outbreaks at see. Truck drivers are quitting b…

Chips are also obvious because they are a discrete thing that is at the end of one long supply chain and then beginning of other long supply chains.

Re: A big hurdle to fixing the chip shortage: substrates

#12

Post by cartoonworld »

cure wrote: post #8

From TFA: > By 2025, she foresees demand for around 185 million square feet of advanced substrate manufacturing space against about 145 million square feet built. It's curious that the production capacity for substrate is expressed in terms of manufacturing space. Is that an industry-specific quirk?

Seems reasonable, semi is fabbed with a lithographic process, the # of devices on the wafer isn’t necessarily tightly coupled with size, has variable resolution and defects.

The work unit is completed wafers that later get binned into different device quality levels.

Makes sense when your biz is to blast plasma over mm2 of silicon

Re: A big hurdle to fixing the chip shortage: substrates

#13

Post by thehappypm »

vkou wrote: post #10
nostrademons wrote: post #6

Earlier quoted context omitted.

Also imagine that there are no truck drivers to drive the bananas from the plantations to your local stores, and no ships to bring fertilizer to the banana plantations. Even when they start growing again, it's going to be a while before you can get one. Supply chains in general are in shambles. We had mass COVID outbreaks at the ports that shut down unloading, as well as outbreaks at see. Truck drivers are quitting b…

Countries have closed their borders to casual travel, but not to shipping.

China, notably, closes ports to end outbreaks.

Re: A big hurdle to fixing the chip shortage: substrates

#14

Post by danielodievich »

davidw wrote: post #9
Robotbeat wrote: post #3

It’s strange that this happened. Did COVID just cause everyone to stop investing for a bit, leading to all these downstream problems? Or was this gonna happen anyway?

IIRC, some industries did stop or slow investing, foreseeing a dip in the economy. The dip proved to be briefer than expected though, which is good, but left people scrambling for inventory. The guy who runs my local bike shop is saying they still won't have enough bikes next year.

I just came back empty handed from bike shop trying to buy some spare tubes. No supply. I better not get too many flats!

Re: A big hurdle to fixing the chip shortage: substrates

#15

Post by davidw »

danielodievich wrote: post #14
davidw wrote: post #9

Earlier quoted context omitted.

IIRC, some industries did stop or slow investing, foreseeing a dip in the economy. The dip proved to be briefer than expected though, which is good, but left people scrambling for inventory. The guy who runs my local bike shop is saying they still won't have enough bikes next year.

I just came back empty handed from bike shop trying to buy some spare tubes. No supply. I better not get too many flats!

If it's a MTB or gravel bike you may want to invest in a tubeless setup.

Re: A big hurdle to fixing the chip shortage: substrates

#16

Post by joe_the_user »

Robotbeat wrote: post #3

It’s strange that this happened. Did COVID just cause everyone to stop investing for a bit, leading to all these downstream problems? Or was this gonna happen anyway?

What I see as explanations of the chip shortage is a combination of factors.

One immediate cause was that some manufacturers reduced their chip orders month in advance since they expected less demand but then the demand didn't decrease and they had to scramble, increasing general demand. Another immediate cause was that Covid has made some production lines shutdown or become unreliable.

But the reason that now a year or more on, we have problems, seems require more explaining. Larger causes I've heard; The chip supply chain is extremely long, long enough so you get a whipsaw effect or anti-whipsaw effect. A whipsaw effect means by the time demand catches up with supply, it goes beyond it and manufacturers lose money. But what seems to be happening is an anti-whipsaw effect - suppliers are avoiding any panic measures to catch up with demand and so lose money but this means the catching up is a long process.

This is something of a product of a highly capital intensive economy pushing manufacturers to only produce, invest and consume in a narrow range. Limiting investment in capital equipment is a way to make the investment you make is 100% utilized. Limiting consumption to the lowest priced items is a way to make sure all of your production is profitable. It seems like a new phenomena. Instead of a "deflationary spiral" these factors pushed to their extreme could result in a "decreasing production spiral" where physical continually declines despite demand. We're not there yet, of course but it seems like an interesting economic phenomena.

Re: A big hurdle to fixing the chip shortage: substrates

#17

Post by joe_the_user »

cronix wrote: post #4
Robotbeat wrote: post #3

It’s strange that this happened. Did COVID just cause everyone to stop investing for a bit, leading to all these downstream problems? Or was this gonna happen anyway?

Let's say that all Banana growers were shut down for 8 months and during that time all existing supply was bought up that were sitting on store shelves. After they were allowed to start growing again, how long until you see a Banana in your local store? You better be there when they arrive, because everyone else who has been wanting Bananas is waiting too. On top of that, can the Banana grower even get all of the ite…

Let's say that all Banana growers were shut down for 8 months and during that time all existing supply was bought up that were sitting on store shelves.

-- But chip manufacturers didn't shut down. That's even close to the immediate cause, which was that the anticipation of changed future demand on the part of other manufacturers lead to them decreasing and change future orders. If you're going to ELI5("explain this to me like a five year old"), at least give some reasonably analogous situation, jeesh.

I mean, I think people understand that supply takes some time to catch up with demand when you have a complex, interdependent economy. But the adjustment to this shock has taken longer than seems reasonable or seems like happened in the past so more data than X has to adjust for Y which has to adjust for Z is appropriate.

Re: A big hurdle to fixing the chip shortage: substrates

#18

Post by burnte »

Robotbeat wrote: post #3

It’s strange that this happened. Did COVID just cause everyone to stop investing for a bit, leading to all these downstream problems? Or was this gonna happen anyway?

It's poorly implemented JIT. People simplified Just In Time to mena "no inventory" and then when a disruption hit, it echoed up and down supply chains. JIT doesn't mean no inventory, it means managing inventory and your supply chain to ensure adequate iventory based on needs both current and forseen.

One car example, you should ensure you have 4 times as many tires available as you do cars, because an imbalance there becomes either a constraint (too few tires) or a waste (too many tires). But it's not JUST making those numbers match, you have to forecast, how many cars and I going to build, are my supplies for the cars ok, look at normal fluctuations, and then also look at potential supply chain FAILURES and plan for them. Maybe it's easy to get brake pads but the lead time on tires is 4 months. Well then, I don't need to stock as many brake pads in case of a disruption, but I should definitely have enough tires to carry me through a potential disruption (maybe not 4 months worth, maybe I stock 2 and slow down car production, or something).

All these companies kept their shelves bare, and when some companies slowed orders, they didn't stop to think that the manufacturers they bought from would look for other customers to take up capacity. They acted like TSMC would sit there by the phone waiting for some customer to come back. No, they're in the business of selling chips, not in the business of servicing DumbCorp. No one planned for what might happen if they stopped ordering parts, they just expected the capacity to be there.

I'm bringing 6 new sites online this year, and a 7th early in the new year. I just bought a bunch of network equipment for not just our existing sites, but the 7 to come. I looked at supply chain issues, and said to my CFO, this inventory is going to sit here for 6 months, but we get a larger quantity discount, and we'll get the new sites online faster and not worry about getting this equipment if we buy now. We COULD have saved that money now, but the advantages of having it when we need it is greater than having that money in the bank for 6 more months.

JIT means planning ahead, not just micromanaging inventory. Too many MBAs don't get that.

Re: A big hurdle to fixing the chip shortage: substrates

#19

Post by mschuster91 »

nostrademons wrote: post #6
cronix wrote: post #4

Earlier quoted context omitted.

Let's say that all Banana growers were shut down for 8 months and during that time all existing supply was bought up that were sitting on store shelves. After they were allowed to start growing again, how long until you see a Banana in your local store? You better be there when they arrive, because everyone else who has been wanting Bananas is waiting too. On top of that, can the Banana grower even get all of the ite…

Also imagine that there are no truck drivers to drive the bananas from the plantations to your local stores, and no ships to bring fertilizer to the banana plantations. Even when they start growing again, it's going to be a while before you can get one. Supply chains in general are in shambles. We had mass COVID outbreaks at the ports that shut down unloading, as well as outbreaks at see. Truck drivers are quitting b…

> Also imagine that there are no truck drivers to drive the bananas from the plantations to your local stores, and no ships to bring fertilizer to the banana plantations.

In the UK, the situation is even worse: because there is an acute shortage of truckers to truck pigs from farms to slaughterhouses and a lack of butchers, 100k pigs are set to be killed and burned - they simply grow each day, and butchers have limits on how big/heavy the pigs may be: https://www.dailymail.co.uk/news/article-9958663/Farms-set-k...

Turns out, no one but immigrants wanting to send or set aside money for their home country wants to do the job for the wage the companies are paying. And companies can't pay better wages because customers are conditioned on cheap meat. And politicians haven't done anything to curb that because tolerating rising food prices is one of the fastest ways of not getting reelected.

Brexit really hit at the worst possible time, and now innocent pigs have to suffer for society's failures. What a damn tragic waste.

Re: A big hurdle to fixing the chip shortage: substrates

#20

Post by evancox100 »

cartoonworld wrote: post #12
cure wrote: post #8

From TFA: > By 2025, she foresees demand for around 185 million square feet of advanced substrate manufacturing space against about 145 million square feet built. It's curious that the production capacity for substrate is expressed in terms of manufacturing space. Is that an industry-specific quirk?

Seems reasonable, semi is fabbed with a lithographic process, the # of devices on the wafer isn’t necessarily tightly coupled with size, has variable resolution and defects. The work unit is completed wafers that later get binned into different device quality levels. Makes sense when your biz is to blast plasma over mm2 of silicon

What you're saying seems to make sense if they were referring to output in terms of total area of substrates produced, but instead sounds like TFA is talking about manufacturing floor space
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