Any bets on how long before the component shortage bubble explodes?

[peter-h]

It is just a bubble. The fact that most passives are easily available confirms what is already obvious: the demand for the end product is not significantly larger.

What's happened is that a lot of firms converted cash into a stockpile of single sourced chips. The crazy JIT process (operated by most big firms) has just made everything worse.

I've just had a delivery of 100 STM 32F4 chips, from a normal disti. Order was placed in July. At one point the delivery date was revised to mid 2022...

Also there are the usual cowboy distis selling the chips for say $100; the key being that they have the chips to sell.

I would bet on a bloodbath in a few months' time.

[Kleinstein]

With computers there are not that many passives that go with the chips - mainly the decoupling caps and there we had a supply shortage some years ago and may have reserve capacity as a consequene. For the very fine structured part there seem to be some shortage and limits in the capacity. Even now not many put an Intel CPU in the shelf hoping the price will go up. Still these chips see some shortage.

For the more common chips there is some stockpiling - not just for speculation, but from those who need the chips and now buy before and not just in time. There may be an increasing number of NOS parts coming up, but this may take some time to happen. Many stock will be just used and than maybe lower sales in 2023, when the inventory goes down to a more normal level.

[Stray Electron]

  What is your interpretation of "Explodes"?   Companies like Ford have parking lots full of new trucks that are missing the engine CPUs and the deliveries of new vehicles are running months behind and it's not uncommon for dealers to be charging $20,000 above list price but still business continues so what would you consider an "explosion"?

  Frankly I don't see any impending explosion, all I predict is that some industries, such as new car production, will simply grind to a halt due to a lack of parts. Even so, there is still a huge number of used, vehicles, used computers, etc so it's doubtful that anyone or any industry is going crippled due to a lack of NEW products.

   Keep in mind that most countries have encountered this repeatedly in their histories; consider the lack of NEW cars and hundreds of other NEW products during WW-I and WW-II.

  Sorry, Chicken Little but the sky isn't falling!

[jmelson]

I was looking for some Xilinx chips several weeks ago, Digi-Key said they would have no stock until December.
I just placed the order, to get into the waiting line, they shipped them 2 days ago!

Jon

[bdunham7]

It is just a bubble. The fact that most passives are easily available confirms what is already obvious: the demand for the end product is not significantly larger.
I would bet on a bloodbath in a few months' time.

The manufacturing and marketing of simple passives is probably quite different from semis.  The backlog of container ships at ports would indicate that demand for end products is larger at the moment.

I agree that there is likely to be an implosion of some sort, seeing as China seems to be having a second Cultural Revolution of sorts, but I wouldn't bet on that implosion turning out in a particularly good way.  If you think it will result in universally plentiful semis at bargain prices, you're more optimistic than I am. 

[Cerebus]

  What is your interpretation of "Explodes"?   Companies like Ford have parking lots full of new trucks that are missing the engine CPUs and the deliveries of new vehicles are running months behind and it's not uncommon for dealers to be charging $20,000 above list price but still business continues so what would you consider an "explosion"?

  Frankly I don't see any impending explosion, all I predict is that some industries, such as new car production, will simply grind to a halt due to a lack of parts. Even so, there is still a huge number of used, vehicles, used computers, etc so it's doubtful that anyone or any industry is going crippled due to a lack of NEW products.

   Keep in mind that most countries have encountered this repeatedly in their histories; consider the lack of NEW cars and hundreds of other NEW products during WW-I and WW-II.

  Sorry, Chicken Little but the sky isn't falling!

You've clearly missed the sense that "bubble" was used in, stemming from the "south sea bubble" of 1720, meaning an unsustainable overpricing of, and consequent demand for, something so that prices inflate, and inflate, and inflate until the "bubble bursts".

[TimFox]

The "South Sea Bubble" of 1720 was actually securities fraud.
More recent "bubbles" have involved inflated real estate values.
A good historical summary is "A Short History of Financial Euphoria" by J K Galbraith.
https://www.penguinrandomhouse.com/books/321392/a-short-history-of-financial-euphoria-by-john-kenneth-galbraith/

[Cerebus]

The "South Sea Bubble" of 1720 was actually securities fraud.

Yes, it's just when the term popularly entered the language.

[TimFox]

I was just pointing out that there were different causes for the historical "bubbles".
Another term for mining or commodity fluctuations is "boom and bust", implying cyclical behavior.
My personal favorite fictional description of fraudulent corporate securities activity is "How We Live Now" by Anthony Trollope (1875).

[Benta]

The "shortage" is to 90% psychological. Happens around once a decade.
There are several elements:
1: the really big customers (automotive/cellphone etc.) get a scare, eg, Corona and start cancelling orders, expecting falling demand (big mistake). This really pisses off the semi manufacturers, because they are operating on minimum profit margin here.
2: the end customer demand falls much less than expected. Panic ordering sets in to replace the cancellled orders. Supply chain breaks down.
3: FT (or whoever) writes an editorial about chip shortage.
4: the medium-sized customers start double/triple/quadruple ordering at the distributors, creating the bubble.

End result: total chaos in the supply chain management. There may be a smal deficit in wafer fab capacity, perhaps a couple of percent, but calling out for the semis to build new wafer fabs is hypocritical at best.

The reponsibilty of the whole mess lies squarely with purchasing departments at a few major customers in automotive and consumer markets.

PS: I loved selling semis to industrial customers. No purchaser ever got fired for paying a bit more, providing he got the parts when needed. Very loyal and reliable customers. In automotive and consumer it's all about squeezing the price til the manufacturer screams. Not nice.

[Cerebus]

Go back and read what he said again. "Psychological causes" ≠ "imaginary phenomenon". You can see it at the moment in the UK, a minor difficulty with petrol and diesel distribution but no actual shortage of petrol at the pumps has been turned into petrol pumps drained dry left right and centre by panic buying. There was no petrol shortage, people believed there was and turned it into a reality.

[Benta]

Who's "he"?

[MT]

Dont exclude and underestimate Klaus Schwab and the Davos crowd etc and their planetary eugenically feudal Great Reset agenda in this component shortage.

[Cerebus]

Who's "he"?

"The cat's father!" (traditional retort). The reference was to you. Did I make a gender boo-boo?

Edit: Now I see the confusion. Hareod made a remark that suggested you were talking out of your hat because he/she/it was experiencing actual shortages not what he/she/it took as you implying by taking psychological as "not real, imagined". That message has disappeared making mine into a non-sequitur. (I don't normally quote things I'm replying to if the reply will naturally follow the comment.)

[Bud]

Dont exclude and underestimate Klaus Schwab and the Davos crowd etc and their planetary eugenically feudal Great Reset agenda in this component shortage.

Dont also miss appointments with your psychiatrist. 

[floobydust]

This is trade wars, I think it has nothing to do with the usual excuses and "supply and demand" curves economists believe in.

Look at an input cost, that of polysilicon it's up 250% this year. I think almost 80% of the world's polysilicon comes from chinese plants.
US Senate passed the Uyghur Forced Labor Prevention Act which bars imports of all goods produced in Xinjiang, a manufacturing hub for silicon metal and polysilicon. Cotton and tomatoes were already blocked.

china recently ordered plants to reduce polysilicon output by 90%... throttle down to only 10% of your August output for the rest of the year at least. This despite adding capacity.
I think just to create a shortage and spike up the prices, and retaliate. High-grade is used for IC's and lower grades for solar cells.

Prices will continue to skyrocket based on politics alone.

[peter-h]

The cost of silicon must be a negligible portion of a USD 5-10 chip.

Also prices aren't really going up (except for Maxim but they are a joke anyway) - unlike previous bubbles of long ago where a 74LS245 would go GBP 0.25 to 2.50 and then back to 0.25 when it all crashed, and I am talking of normal distribution, not the cowboy dealers. This time round the cowboy dealers are also around but selling STM 32F4 for USD 50-100.

[Benta]

Who's "he"?

"The cat's father!" (traditional retort). The reference was to you. Did I make a gender boo-boo?

Edit: Now I see the confusion. Hareod made a remark that suggested you were talking out of your hat because he/she/it was experiencing actual shortages not what he/she/it took as you implying by taking psychological as "not real, imagined". That message has disappeared making mine into a non-sequitur. (I don't normally quote things I'm replying to if the reply will naturally follow the comment.)

Hahaha! No gender boo-boo, I don't give a hoot about that kind of thing.

But posting something provocative and then deleting that post after someone else answers is trolling at its worst. Your analysis is completely correct, I lost the connection between your post and the troll.

[Cerebus]

Who's "he"?

"The cat's father!" (traditional retort). The reference was to you. Did I make a gender boo-boo?

Edit: Now I see the confusion. Hareod made a remark that suggested you were talking out of your hat because he/she/it was experiencing actual shortages not what he/she/it took as you implying by taking psychological as "not real, imagined". That message has disappeared making mine into a non-sequitur. (I don't normally quote things I'm replying to if the reply will naturally follow the comment.)

Hahaha! No gender boo-boo, I don't give a hoot about that kind of thing.

But posting something provocative and then deleting that post after someone else answers is trolling at its worst. Your analysis is completely correct, I lost the connection between your post and the troll.

I don't think it was intended to be provocative or trolling (slightly sarky maybe, but nothing extreme), I think it was a genuine "didn't read carefully enough". Hareod probably figured it out either spontaneously or because of my comment, went "Doh!' and withdrew the post either not realising or spotting the discontinuity it would cause.

[Benta]

This is trade wars, I think it has nothing to do with the usual excuses and "supply and demand" curves economists believe in.

Look at an input cost, that of polysilicon it's up 250% this year. I think almost 80% of the world's polysilicon comes from chinese plants.
US Senate passed the Uyghur Forced Labor Prevention Act which bars imports of all goods produced in Xinjiang, a manufacturing hub for silicon metal and polysilicon. Cotton and tomatoes were already blocked.

china recently ordered plants to reduce polysilicon output by 90%... throttle down to only 10% of your August output for the rest of the year at least. This despite adding capacity.
I think just to create a shortage and spike up the prices, and retaliate. High-grade is used for IC's and lower grades for solar cells.

Prices will continue to skyrocket based on politics alone.

I know the Bernreuter report. But what's missing in this conspiracy hypothesis is, that it's got very little to do with semiconductor manufacturing (as in semicinductor chips).
The Chinese polysilicon manufacturing is almost all about solar panels - and China is very succesful in delivering those. The main suppliers for the semi fabs are still Wacker, Hemlock et al.

No, the issue is still wafer fab capacity, which might be a couple percent low, and irresponsible pruchasing strategies from big customers.

[Benta]

@Cerebus: I've no idea, I didn't see the post. Let's leave it there. Cheers.

[tooki]

It is just a bubble. The fact that most passives are easily available confirms what is already obvious: the demand for the end product is not significantly larger.

I think your conclusions are wrong.

1. Making passives isn’t nearly as difficult. There’s a lot of manufacturing capacity, and it’s easier to ramp up than semiconductor manufacturing, which is insanely complex and time-consuming. The start to finish process for modern semiconductors takes around 3 months due to the sheer number of steps involved (about 700 steps).

2. The high availability of passives is likely partly due to the fact that they’re useless without the semiconductors they’re used with. No chips = no boards being made = less passives being bought + factories still pumping them out = plenty on the market.

[floobydust]

The fab reports say production is already up, 200mm is +5%. World Fab Forecast Report (2020 to 2022) shows historic investment, $90B in equipment wow.
Intel celebrates breaking ground. Oh just 3-4 years to go on a puny $20B fab

I thought it was strange Wacker AG 5-year contract for selling 70MT polysilicon to chinese JinkoSolar. As if the chinese need any for solar lol. Wacker Germany is doing excellent but USA is reducing shifts, something to do with the chinese 57% duties on US PV. So it doesn't really make sense to buy German polysilicon (PV, not IC grade) when you are throttling back your own production PV grade 90%.

I think geopolitics and a trade war are underlying the shortages.

[T3sl4co1l]

It is just a bubble. The fact that most passives are easily available confirms what is already obvious: the demand for the end product is not significantly larger.

I think your conclusions are wrong.

1. Making passives isn’t nearly as difficult. There’s a lot of manufacturing capacity, and it’s easier to ramp up than semiconductor manufacturing, which is insanely complex and time-consuming. The start to finish process for modern semiconductors takes around 3 months due to the sheer number of steps involved (about 700 steps).

2. The high availability of passives is likely partly due to the fact that they’re useless without the semiconductors they’re used with. No chips = no boards being made = less passives being bought + factories still pumping them out = plenty on the market.

Modest increases perhaps, but mind that bringing new capacity online takes almost as long.  Remember the 2018 capacitor shortage.

Tim

[Simon]

Dont exclude and underestimate Klaus Schwab and the Davos crowd etc and their planetary eugenically feudal Great Reset agenda in this component shortage.

reset to what? what does anyone stand to gain other than the grey market dealers that have no influence and can cash in on parts. Which is nothing new. Just look for obsolete infineon parts, if the part is popular they are 4x the price, if the dealer messed up and the parts were not so popular they are 0.25x the price. This is obvious with infineon stuff as they just obsolete stuff no matter how popular it is as popular to them means the car makers buy them direct in the millions of peices.

I have just got my employer to pre-order 1'000 SAMC21 microcontrollers, they are due in November, the next predicted shipment is september 2022. That is us fixed for any microcontroller required in a design for at least the next year as I know it will cover any requirement. next I will move on to voltage regulators and then general MOSFET's.

There were already issues with silicone based parts before covid, demand was growing, electric cars are on the rise, people don't "just" build fabs's that cost billions of dollars. There was an earlier shortage of passive a couple of years ago, obviously the industry caught up and now there is little use for a ceramic bypass capacitor for a microcontroller that you cannot get.

So as for your conspiracy theories, please take them elsewhere - maybe to a shrink.