Cisco says computer chip shortage to last six months

&quot;There are numerous other applications for semiconductors, but these represent the general trend. One cannot blame semiconductor companies for switching capacity to growing applications while automakers cut production (and presumably semiconductor orders) by 40% over two quarters. It will take time to resolve the shortages. TSMC stated it takes at least six months from semiconductor production to auto production and involves several links in the supply chain. Capacity can be shifted in the short term, but increasing overall capacity often requires construction of new wafer fabs, which takes about two years. Automakers gave up their place in line, so they will have to wait their turn for semiconductors.&quot;<p><a href="https:&#x2F;&#x2F;semiwiki.com&#x2F;semiconductor-services&#x2F;298336-automakers-to-blame-for-semiconductor-shortage&#x2F;" rel="nofollow">https:&#x2F;&#x2F;semiwiki.com&#x2F;semiconductor-services&#x2F;298336-automaker...</a>

Having worked in the auto industry I can say this is the sort of thing was never, ever expected from a supply shortage. The frailty of the global supply chain network has been brutally exposed these last 14 months.

I&#x27;m more inclined to believe TSMC and Intel than Cisco. They&#x27;re closer to the problem.<p>&quot;actually we see that demand continued to be high and the shortage will continue throughout this year and may be extended into 2022 also.&quot; C. C. Wei, TSMC CEO<p>&quot;We expect it will take a couple of years for the ecosystem to make the significant investments to address these shortages.&quot; Pat Gelsinger, Intel CEO<p>Also, this is a deeply technical topic where BBC should cite engineers and industry veterans, not Dan Ives from Wedbush Securities.

“The problems have been worsened by a string of other factors, including a fire at a semiconductor factory and weather issues.”<p>It is sometimes humbling to remember that despite our technical advances we’re still subject to the forces of nature.

Cisco are also getting stung at the latest node. For their new line of Silicon One switch&#x2F;router chips they decided to ditch their usual fabless partner (Broadcom?) and go direct to the fab (I think it&#x27;s Samsung but not sure - doesn&#x27;t really matter anyway). They did this to save money and also with the intention of producing their own merchant silicon to directly compete with Broadcom&#x27;s. This would have been a great plan if there hadn&#x27;t been a major 7nm capacity problem which resulted in the smaller players, such as themselves, not getting the wafers they need. I don&#x27;t think there are any public reports of anyone using Silicon One yet (except Cisco themselves) but this won&#x27;t help them win any orders.<p>The car industry might have something to do with it also but it&#x27;s by no means the only cause of Cisco&#x27;s concerns.

2020 has seen record investment in semiconductor manufacturing equipment (+20% to 70 B USD).<p><a href="https:&#x2F;&#x2F;www.scmp.com&#x2F;tech&#x2F;tech-trends&#x2F;article&#x2F;3129611&#x2F;us-china-tech-war-china-becomes-worlds-top-semiconductor-equipment" rel="nofollow">https:&#x2F;&#x2F;www.scmp.com&#x2F;tech&#x2F;tech-trends&#x2F;article&#x2F;3129611&#x2F;us-chi...</a><p>In particular in China and South Korea.<p>I wonder when all this extra capacity translates into more supply?

I still don’t really grasp what factor causes this general shortage across all chip producers and nodes. Why is a spike in demand for pc cpus and gpus causing a shortage in other chips that might be using older nodes? Are there some underlying other constraints under chip production that is causing a ripple effect up the supply chain?

The winter storm in Texas did a big damper on NXP, Samsung, etc. Some fabs are not at 100% so I highly doubt it&#x27;s going to take 6 months to recover.

We often talk about the auto industry as a whole screwing up but I wonder if there&#x27;s an automaker out there that didn&#x27;t follow this trend and is doing fine.

One of the large problems is a shortage of some common part that is widely used. I recall when 74LS245 were selling for over $100 each to people with $500,000 machines that needed that part. During that shortage we actually built small boards with 3-4 lesser chips that fulfilled the need for the part. When a genuine 245 was obtained, it could be easily swapped in, but many machines lived out their full life with this kluge in it. That one series of chips built Future into the colossuss it is today because they had the smarts to get their engineers to spec in that family (and many others) and Future booked huge orders with Japanese suppliers and enjoyed huge margins. ClassIC did the same thing later. Now Asia dominates.

Dumb question: automakers do relatively simple things with their chips. Is there room on wafers with more advanced chips to squeeze in automotive chips?

This seems overly optimistic.

Just 2 more weeks!

L

The biggest problem is everything is JIT so all supply chains using JIT (like all of them) get disrupted with as little as 10% variance from the media flow rates. The only real answer is to relax the reasons why we have JIT: taxes on inventory which prevent accumulating safety stock inventory. Having larger safety stock would very quickly end this supply chain disruption and solve the chip shortage in few months rather than 6-24 months.