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Chip shortage? What chip shortage? Record 1 trillion semiconductors shipped

Covid in China and a fire in Berlin trouble markets however

The semiconductor industry shipped a record 1.05 trillion chips in the year to November 2021 -- the sector’s highest-ever annual total – even as industry downstream lamented a widespread shortage.

Global chip sales increased “substantially on a year-to-year basis across all major regional markets and semiconductor product categories,” said John Neuffer, CEO of the Semiconductor Industry Association (SIA).

He added:  “With one month of 2021 sales data still to be reported, the industry has already set a new annual record for… units shipped, as chipmakers have substantially ramped up production to address high demand.”

Demand was led by the US where sales increased 28.7%. Europe followed with 26.3% sales growth.

The 1 trillion semiconductors were shipped even as automakers were expected to lose more than $200 billion in revenue in 2021 amid shortages of the specific types of chips they need. Elsewhere, Apple reportedly curbed its production of iPads by 50% in November to guarantee enough chips for its iPhone 13 amid supply chain issues.

Broader supply chain issues as well as rampant demand for chips that's left fabs operating at capacity has caused bottlenecks across verticals. As Intel CEO Pat Gelsinger noted on an earnings call: “Things like ethernet controllers and power supply devices are holding us back… trust me, we would be shipping a lot more units, right, if we weren’t constrained by the supply chain of these other components in the industry.

He added: "Our customers, both cloud customers and OEMs, very strong backlogs that they’re pressing us aggressively to satisfy, but we’re really limited by these ‘match sets’”. Others chip firms are in the same boat.

See: The Chip Shortage: From boilers to the cloud, what does 2022 bring?

The record semiconductor sales come as a lockdown imposed on the Chinese city of Xi’an forced memory chip maker Micron to reduce its workforce, hitting DRAM output, the company said on December 29, sending fresh fears across the supply chain that Covid may yet further disrupt already challenging production.

News that the Netherlands’ ASML -- a key supplier to semiconductor makers -- had suffered a fire in a Berlin factory further roiled markets. ASML said on January 3 that it was too early to assess impact on operations. Any shipment delays would impact customers who are trying to expand semiconductor production capacity.

The Berlin site makes wafer clamps and mirror blocks in advanced extreme ultraviolet lithography machines. ASML has a de factor monopoly on the machines, vital to chip production, supplying TSMC and  Samsung.

According to IDC, the industry will see normalization and balance by the middle of 2022, with a potential for overcapacity in 2023 as larger scale capacity expansions begin to come online towards the end of 2022. Growth is driven, the research house said in late 2021, by mobile phones, notebooks, servers, automotive, smart home, gaming, wearables, and Wi-Fi access points, in an ever-more networked world.

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