Tuesday, October 5th 2021
TSMC Claims Some Companies are Sitting on Chip Inventories
It appears that some of the current chip shortages might be artificially induced by one or multiple companies in the chip supply chain, according to an article by TIME Magazine. The article is taking a look at the role TSMC is playing in the global chip production industry and TIME has interviewed TSMC chairman Mark Liu among others in the industry.
Mark Liu is quoted as saying "But I told them, "You are my customer's customer's customer. How could I [prioritize others] and not give you chips?"" when asked about the complaints by car makers, since they were among the first to suggest TSMC was one of the issues. Due to the various allegations against TSMC, Liu had a team collect data points to try and figure out what was going on and to see which customers were truly running low on stock and which customers that might be stockpiling for a rainy day.
The end result of this was that TSMC decided to reallocate some production to customers it deemed to be running out of stock, whereas those that appeared to be sitting on their inventory, for whatever reason. This was apparently not a popular decision, but it seems like a fair one, considering the current situation. Liu is again quoted saying "there are people definitely accumulating chips who-knows-where in the supply chain," suggesting that it might not actually be TSMC's customers that are the issue here, but rather middlemen and distributors that are hoarding chips and pushing up prices.
The article is worth a read if you're interested in a slightly closer look at TSMC, although it doesn't go into any more detail about the chip hoarding. On the other hand, it does look at the geopolitical issues that TSMC and Taiwan faces, while Liu also frowns upon the current US$50 billion budget that President Biden has allocated for new foundries in the US, considering that TSMC is investing twice as much on its own over the next three years.
Source:
TIME
Mark Liu is quoted as saying "But I told them, "You are my customer's customer's customer. How could I [prioritize others] and not give you chips?"" when asked about the complaints by car makers, since they were among the first to suggest TSMC was one of the issues. Due to the various allegations against TSMC, Liu had a team collect data points to try and figure out what was going on and to see which customers were truly running low on stock and which customers that might be stockpiling for a rainy day.
The article is worth a read if you're interested in a slightly closer look at TSMC, although it doesn't go into any more detail about the chip hoarding. On the other hand, it does look at the geopolitical issues that TSMC and Taiwan faces, while Liu also frowns upon the current US$50 billion budget that President Biden has allocated for new foundries in the US, considering that TSMC is investing twice as much on its own over the next three years.
99 Comments on TSMC Claims Some Companies are Sitting on Chip Inventories
And if such thing would become public after some of the targeted competitors went insolvent/bankrupt.
Oh that would be a story, something like "A cartel of big players of commertial sector XY killed 100 startups by stockpiling needed chips."
I hope someone shines right on it
cheers
arewere dirt cheap at something like $1 or less for the most basic options. Now those same chips are going for $10 or more for the popular options.Not all distributors are doing this, but a lot of the parts are no longer in stock with 52 weeks or longer lead times, so those that have stock, are taking advantage of it.
I would actually expect quite a few startups going bust due to this, as it's simply not economically viable to produce a lot of things right now, not just because of the price of some components, but also due to the much higher shipping costs that will eat in to your bottom line.Well, that's your opinion, but you are clearly not keeping up with who the world is changing. TSMC is likely to continue to be on top of the foreseeable future, as they're building a couple of fabs in Arizona, if you missed it and are considering other parts of the world as well. I guess you simply don't understand how many customers they have outside of Apple.
I honestly don't think TSMC is the least bit concerned about US national security.
People are keeping their old iPhones longer (cnn.com)
Bloomburg and several other financial predictions predict a gluttony of chips by end of 2023. I think in 2025 TSMC actually will be hurting quite badly. With super high inflation occurring, people are going to be less willing to upgrade electronic devices at the pace they used to, combine that with the new factories coming online from TSMC and Intel, its going to be a perfect storm for over supply and less demand probably late 2023 or early 2024. Which is good news for the consumer, but I just think TSMC will be hurting as far as record profits go, they won't be record anymore imo, they are enjoying their peak right now.
They produce such a wide range of chips that it'll be impossible for anyone to compete directly with them at all levels. TSMC's profits might go down, but the only real effect that might have, is that they'll invest a bit less in new fabs, which they are cleverly investing in now, when they're making money hand over fist.
No oversupply is really expected and it's easier for someone like TSMC to shift production to something else, than it is for Intel.
1) Stock pile chips
2) Slow down manufacturing to help limit available inventory
3) Keep prices high or push higher due to limited availability
4) Ensure folks that more will be done to improve upon inventory
5) ????
6) Profit!
Bottom line is, for these companies - make the investors happy. Make them happy by making more money. Make more money by taking advantage of the situation....every braking news story about a shortage or a pandemic or a natural disaster or a freak accident (like a fire or power outage or explosion) that could, maybe, even when the above mentioned issues don't relate to a company directly.
The wife's parents, they already did their Christmas shopping for the grandkids and finished up with it about a week ago because they understand the issues of technology being in short supply. Are they fools for getting their shopping done so early? Or are they smart and bypass all the other people that'll wait until Black Friday or closer to Christmas?
However, most issues right now, has nothing to do with any "actual" shortages for most things, instead it appears to be logistics that is holding things up, which in turn leads to further shortages.
As I wrote in a different thread, when everything from fuel prices to the actual shipping containers are hitting record high pricing, plus of course the shipping costs from one continent to another, you end up with certain goods not being shipped, simply because there's no profit to be had and other goods gets a price hike at multiple stages until it reaches the consumer. This doesn't take into consideration labour related issues due to various restrictions or the long queues of freight ships shitting outside various major harbours around the world, waiting to be loaded or unloaded. Even IKEA has been in the news explaining why there are shortages in their stores and the main issue is transportation of the goods, not that the goods can't be made.I'd say it was a smart move, as Black Friday is not going to be much of an even this year imho.Well, I would believe that TSMC has limited options when it comes to re-allocating production schedules, but I think they are trying to make sense of it all, since they're clearly not seeing the same issues as some industries are. At the end of the day, it comes down to what types of contracts that have been signed. It's also not really up to TSMC to prevent something like this, as it should be their customers responsibility. However, I guess ST, NXP, Qualcomm etc. are more than happy to sell as much as they can, just like Nvidia and AMD are, so this also comes down to another bout of
greedmaking business so the poor shareholders can afford to eat...But yeah why produces Entry CPU and GPU in 12nm if u can use TSMC 7nm and push the Prices even higher and higher.