Semi-Fulfilling Prophecy: Ongoing Chip Shortage Is Now Impacting Chipmaking Equipment

Chairman David Shen of Hota Industrial Manufacturing, a key automotive parts supplier, said: "We are trying to find alternative equipment suppliers for drilling machines [for auto parts], but the precision and speed are just not as satisfactory as what we used to have."

Chiu Shih-fang, a tech and supply chain analyst with Taiwan Institute of Economic Research, concluded: "It's a chain reaction. ... Electronics and automakers expect component makers to expand capacity to address the shortage. But when these component makers talk to their equipment and materials suppliers, they realize deliveries could be as late as the end of this year or even next year."

"That means basically everyone is kind of stuck here. The dangerous part is that even if only one or two components are lacking, the whole system would be unable to move forward."

Recall, earlier this month we wrote that U.S. exporters of semiconductor chipmaking tools were struggling to get licenses to sell to China. The U.S. government has been dragging its feet in approving licenses for companies to sell chipmaking equipment to Chinese semi company SMIC, we wrote.

SMIC is "the largest foundry in mainland China, is an important player in the global semiconductor supply chain, which is under pressure as pandemic lockdowns drive up demand for electronics such as laptops and phones", according to Reuters


Lam Research and Applied Materials are among companies trying to sell about $5 billion of parts and components to help make chips - but licensing has been a hold up. Semiconductor Manufacturing International Corp had been blacklisted by the U.S. in December over concerns it was helping China's military, and its future under a Biden administration remains unclear.

Equipment that is used to make advanced 10 nm and smaller chips is "likely to be denied licenses", and applications are taken on a case-by-case basis, according to the report. “Lam Research is still in the application process and has not yet received a response,” a company spokesperson said. Applied Materials’ CFO said on a recent conference call that the company is not assuming licenses would come through. 

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