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The semiconductor bust – still coming?

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Re: The semiconductor bust – still coming?

#31

Post by kurthr »

MuffinFlavored wrote: post #23
swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

instead of $2.50 -> $100, why don't they make it like... $2.50 -> $5 and actually sell them all?

Because if 5% of the customers actually need the part that bad, they'll make more money and still have almost all the components left... plus bonus supply chain disruption of the western imperialists.

Re: The semiconductor bust – still coming?

#32

Post by CamperBob2 »

swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

Sad to say (and easy to say, given our relatively high margins relative to other product sectors) but those Chinese scalpers are saving our business right now.

It's easy to curse them for price gouging -- and believe me, we have, being forced to pay $300 for $50 FPGAs -- but if they weren't gouging, those parts wouldn't be available to us at all.

Re: The semiconductor bust – still coming?

#33

Post by CamperBob2 »

alimov wrote: post #11
swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

> “…strategically bought…” That’s a key phrase here. Did others do the same? If they didn’t then why not? And if they did, then they are surely profiting from the shortage as well. I wonder how long this can go on for… I mean if you can make less of something, and make 2x or more (in your example) profit from it then I’d guess some businesses might not want this kind of arrangement to end.

Did others do the same?

Yes, and that's part of the problem. It's not just hoarding by Chinese brokers. There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands... just as many/most of us had a garage full of toilet paper last year that we are only now working our way through.

Our factory rep says it's getting hard to walk down the hall between the floor and the receiving dock, given all the boxes stacked up everywhere. They are sweating their next fire inspection.

Re: The semiconductor bust – still coming?

#34

Post by CamperBob2 »

zozbot234 wrote: post #16
swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

The real issue is that these are narrow bottlenecks in very specific components that are used in existing designs. It's not that they can't be substituted with something else, but doing so would require reengineering the product and be just as expensive as the price they're actually paying.

Another issue is that there are simply too many parts. Nobody needs 50 different variants of the same LDO in slightly different temperature grades and slightly different packages, all sold under slightly different part numbers, none of which is available in useful quantities under any one of those part numbers.

Semiconductor manufacturers have been overdue for a back-catalog contraction for years, and I think that's part of what we're seeing now. Many of the parts that are currently in short supply with ridiculous multiyear lead times are not coming back, IMO. Not in 2024, not in 2025, not ever. When you see lead times exceeding two years, that's the manufacturer politely telling you, "Respin your board to use something else. No, really. Respin your board."

Re: The semiconductor bust – still coming?

#35

Post by barry-cotter »

strogonoff wrote: post #24
cherioo wrote: post #18

Earlier quoted context omitted.

I’m not in the hardware industry, but is 215000 microcontroller supposed to be a lot? The case you bring up sounds like run of the mill hoarding for profit. Semi conductor supply shortage can be seen from miles away and building up inventory sounds like exactly the thing broker should do if they foresee shortage to last (and risk losing money if shortage doesn’t last). To me it would only be a problem if NXP, which i…

Free market is a great idea, but it’s fragile in that it requires good faith in order to be fair and it’s not immune to tragedies of the commons. Hoarding or panic buying is an example of bad-faith behavior. Panic buying hurts buyers without means to hoard. With groceries, it might mean their children going hungry after a rich guy empties out local store (not everywhere a store manager can flat out refuse to sell). W…

> Hoarding or panic buying is an example of bad-faith behavior. Panic buying hurts buyers without means to hoard.

Yeah, if you’re not very profitable you won’t be able to afford it. You’re not the best use of the good in question, i.e. the one that makes the most money.

Cornering a market in anything is incredibly hard. Doing it motivates others to find substitutes or secure supply. That’s capitalism. If you don’t want to play find a different game.

Re: The semiconductor bust – still coming?

#36

Post by barry-cotter »

CamperBob2 wrote: post #32
swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

Sad to say (and easy to say, given our relatively high margins relative to other product sectors) but those Chinese scalpers are saving our business right now. It's easy to curse them for price gouging -- and believe me, we have, being forced to pay $300 for $50 FPGAs -- but if they weren't gouging, those parts wouldn't be available to us at all.

/me wipes a tear from his eye at the wonder of markets working to get goods to their highest productivity uses.

Re: The semiconductor bust – still coming?

#37

Post by barry-cotter »

kurthr wrote: post #31
MuffinFlavored wrote: post #23

Earlier quoted context omitted.

instead of $2.50 -> $100, why don't they make it like... $2.50 -> $5 and actually sell them all?

Because if 5% of the customers actually need the part that bad, they'll make more money and still have almost all the components left... plus bonus supply chain disruption of the western imperialists.

The Western imperialist but is a lot less important than the money. It’s all about the money.

Re: The semiconductor bust – still coming?

#38

Post by CamperBob2 »

barry-cotter wrote: post #36
CamperBob2 wrote: post #32

Earlier quoted context omitted.

Sad to say (and easy to say, given our relatively high margins relative to other product sectors) but those Chinese scalpers are saving our business right now. It's easy to curse them for price gouging -- and believe me, we have, being forced to pay $300 for $50 FPGAs -- but if they weren't gouging, those parts wouldn't be available to us at all.

/me wipes a tear from his eye at the wonder of markets working to get goods to their highest productivity uses.

Exactly, it's just capitalism at the end of the day.

But it's cutthroat capitalism to be sure. I don't see how any products with consumer-level pricing and profit margins are getting built at all.

Re: The semiconductor bust – still coming?

#39

Post by SirHound »

ninkendo wrote: post #28
haberman wrote: post #5

I have no expertise in this, and can't even claim to have followed the entire article or video. But the PS5 has been out of stock ever since its release in Nov 2020. That is an astonishing fact to me. I can't think of anything like this in my lifetime. The flagship product of a multinational corporation has been sold out for 18 months. Empty shelves where a product should be. It's just one isolated data point, but it…

The Nintendo Wii had the exact same problem at launch. For the first 2 years or so they were near impossible to find in a store. I remember having to buy a used one for more than retail from some random dude in a parking lot, around a full year after it was released, and it was still hard to find for a long time after that.

What are their relative (stock-suppressed) sales though?

Re: The semiconductor bust – still coming?

#40

Post by rhn_mk1 »

barry-cotter wrote: post #35
strogonoff wrote: post #24

Earlier quoted context omitted.

Free market is a great idea, but it’s fragile in that it requires good faith in order to be fair and it’s not immune to tragedies of the commons. Hoarding or panic buying is an example of bad-faith behavior. Panic buying hurts buyers without means to hoard. With groceries, it might mean their children going hungry after a rich guy empties out local store (not everywhere a store manager can flat out refuse to sell). W…

> Hoarding or panic buying is an example of bad-faith behavior. Panic buying hurts buyers without means to hoard. Yeah, if you’re not very profitable you won’t be able to afford it. You’re not the best use of the good in question, i.e. the one that makes the most money. Cornering a market in anything is incredibly hard. Doing it motivates others to find substitutes or secure supply. That’s capitalism. If you don’t wa…

The main point of the parent is that free market is not fair. If developing a substitute takes ages, the market will remain awful for that long. Perhaps that's a game you want to play, but some pefer not to.
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