Report: Worsening supply chain, manufacturing equipment issues for TSMC and Samsung could hit HPC and AI

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To the combination of economic and geopolitical forces generating high global inflation and growing recession expectations, one can include the continued shortage of microprocessors which, according to a Wall Street Journal article, could have a direct impact on advanced chips, including those used in HPC and AI. Although the flea shortage is not new, its spread to advanced fleas is a more recent development, according to the Journal article.

“The chips with the smallest transistors and the highest performance had largely escaped the drought that hit the automotive and other electronics industries,” the Journal reported. “Now, issues ranging from production problems to a shortage of manufacturing equipment have raised concerns about the ability of the world’s two most high-end chipmakers (Taiwan Semiconductor Manufacturing Company, Samsung) to deliver on promises. of delivery to customers.

The problem could show up in supply chains as early as next year, “with one analyst warning of shortages of up to 20% for the most advanced chips by 2024 and beyond.” Without improved chips, technologies such as high-performance computing, artificial intelligence and more advanced forms of autonomous driving could see their deployment slow, according to industry analysts,” the Journal reported.

As part of the problem, the Journal notes, only two companies, TSMC and Samsung, “are able to build the most advanced chips in the industry.” A third company, ASML Holding NV of the Netherlands, is a developer of lithography technology used in its critical machinery for manufacturing advanced chips. ASML told the Journal that the supply of its systems could not meet demand from companies like TSMC and Samsung, and that the company was working to increase production.

“Chipmaking equipment is arriving increasingly later than expected, and delivery times for new orders have stretched in some cases to two or three years, largely due to a shortage of less advanced chips” , reported the Journal.

Overall, the Journal reporter said there was “a disconnect” between the advanced chip companies’ expected spending on equipment to increase production and the manufacturing equipment companies’ expected revenues. “Chip equipment, which accounts for most of the cost of setting up new chip factories, is expected to generate about $107 billion in sales worldwide this year, according to industry group SEMI. But expected capital expenditures by chipmakers are expected to exceed that, at $180 billion, according to chip consultancy International Business Strategies Inc.”

Technical challenges also posed problems. The Journal reported that yields of chips using Samsung’s 4-nanometer process were below expectations, preventing the company from supplying customers with all of the chips ordered this year. This prompted Nvidia, the Journal reported, to turn to TSMC for next-gen product orders.

Samsung is now “back on the expected yield improvement curve,” Kang Moon-soo, executive vice president of Samsung’s foundry business, told analysts in May. “Samsung said it plans to begin mass production of the world’s first 3nm chips using a new transistor architecture by this month,” the Journal reported. Mr. Kang also said that concerns about Samsung’s foundry business “are excessive and unfounded, Mr. Kang said on the call.”

Intel Corp., meanwhile, produces most of its own chips — although it also contracts with TSMC and Samsung for some products. CEO Pat Gelsinger has announced big plans to expand its manufacturing facilities, including new factories in Ohio and Europe, to produce chips for customers, but it’s a multi-year plan. years in its start-up phase.

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