Chip Shortage is spreading and will take down tech-
Chip Shortages Hinder Automobile, PC, Consumer Electronics Production
The semiconductor industry "has run into a wall" with just a handful of advanced foundries capable of making chips to support surging demand for 5G smartphones, next-generation video game consoles and cloud computing and artificial intelligence systems,
Shortages of chips for the automotive industry have forced carmakers to idle factories. Automobile chip suppliers like
Microchip Technology(
MCHP),
NXP Semiconductors(
NXPI) and
Silicon Labs(
SLAB) have raised prices and warned of shortages lasting well into this year.
Semiconductor manufacturers have prioritized the production of high-end processors for data centers and PCs. They provide higher margins and revenue, Eric Ross, chief investment strategist at Cascend Securities, said in a note.
There are capacity shortages on the "front end" of semiconductor manufacturing with raw chips. The industry also is dealing with shortages on the "back end" with chip assembling and packaging materials, Ross said.
For instance, the industry is seeing "massive shortages" of widely used ABF packaging substrates, Ross said. ABF stands for Ajinomoto Buildup Film, a resin used in chip packaging. It provides electrical insulation of complex circuit substrates used in high-performance processors.