Some chip-starved manufacturers are scavenging silicon from washing machines, as global shortage shows no sign of easing

Tesla said production remains hampered by shortages and elevated prices for key parts, while Volkswagen warned to expect negative effects from chip scarcity
Toyota Motor trimmed its output target by about 100,000 units for this year on insufficient semiconductor supply

Semiconductors

Bloomberg

Published: 3:26pm, 21 Apr 2022

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A major industrial conglomerate has resorted to buying washing machines and tearing out the semiconductors inside for use in its own chip modules, according to the CEO of a company central to the chipmaking supply chain.

ASML Holding’s Chief Executive Officer Peter Wennink remarked on the situation, without naming the conglomerate, during his company’s earnings call Wednesday. The beleaguered firm relayed its struggle to him only the prior week, he said, signalling that chip shortages are going to persist for the foreseeable future, at least for some sectors.

“The demand we are currently seeing comes from so many places in the industry,” Wennink said, pointing to the wider adoption of Internet of Things (IoT) applications. “It’s so widespread. We have significantly underestimated the width of the demand. That, I don’t think, is going to go away.”

Even major chip equipment makers including US-based Lam Research are struggling to get enough components to fulfil orders, potentially making it more difficult for semiconductor fabs to significantly increase their capacity in the near term.

Workers dismantling electronic waste at a workshop at Guiyu township in Shantou city in southern China’s Guangdong province on August 9, 2014. Photo: AFP

“On the demand side, the entire environment remains very strong, while continued supply-related delays could potentially limit how much wafer fabrication equipment investment can be executed in 2022,” Lam’s CEO Tim Archer said on an earnings call on Wednesday.

Carmakers have yet to overcome a semiconductor crunch that has challenged their operations for over a year. Tesla said this week that production remains hampered by shortages and elevated prices for key components, while Volkswagen has cautioned to expect continued negative effects from chip scarcity. Earlier this week, Toyota Motor trimmed its output target by about 100,000 units for this year on insufficient semiconductor supply.

Why semiconductors are so important to 'Made in China 2025'

Production halts and component shortages as a result of the Russia-Ukraine war could intensify supply-chain challenges and delay a recovery of European auto sales in 2022. March passenger-car sales from Europe’s five largest markets are 40 per cent below pre-pandemic 2019 levels, indicating the semiconductor crisis remains unresolved.

Despite strong order books, official ACEA data due on April 20 may reveal a 20 per cent slide in European auto purchases due to these bottlenecks, according to Bloomberg Research analysts Michael Dean and Cliff Makanda.

Some signs of weakening consumer electronics demand have yet to translate into relief for manufacturers of other silicon-hungry products and devices.

US chip maker Onsemi warns of Shanghai disruptions amid supply chain strain

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip maker, reiterated last week that its capacity remains tight throughout 2022. A major Chinese chip maker has sold out its capacity through 2023, according to ASML’s Wennink.

TSMC’s chief executive C.C. Wei highlighted the challenges its suppliers are facing during an earnings call last Thursday, saying a constraint in labour and chips has led to a longer delivery time for tools.

The wait times for semiconductor deliveries rose slightly in March, reaching a new high of 26.6 weeks, after lockdowns in China and an earthquake in Japan further hampered supply, according to research by Susquehanna Financial Group.

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