Caixin
Sep 17, 2021 09:05 PM
TECH

China Chip Exec Says Crunch Could End by Mid-2022

A Unisoc 5g mobile phone chip at an exhibition in Shanghai on Feb. 23. Photo: VCG
A Unisoc 5g mobile phone chip at an exhibition in Shanghai on Feb. 23. Photo: VCG

The global microchip shortage will persist through 2021 but should end by the second or third quarter of 2022 on the back of manufacturers’ heightened efforts to boost production, according to an industry expert.

The remarks by Chu Qing, CEO of phone-chip producer Unisoc, were made at an industry summit on Thursday and come as makers of everything from smart vehicles to consumer electronics grapple with supply chain disruptions caused by the semiconductor crunch.

Chu listed the U.S. tech export restrictions on some Chinese tech companies including Huawei as a key factor behind the chip shortage, saying the containment policy has led to stockpiling which has only aggravated the problem.

“The stockpiles should have met huge market demand,” said Chu, adding that the situation worsened when some distributors and resellers speculated on the market. 

In response Chu said he ordered a ban on stockpiling, also effective on the company’s agents.

Another key factor, Chu said, was the coronavirus-induced abnormal operations at ports globally, which have affected the normal offloading of goods from ships.

Research and advisory firm Gartner predicted in May that the worldwide semiconductor shortage would likely persist until the second quarter of 2022.

To mitigate risk and losses at that time Gartner suggested manufacturers tighten ties with distributors, resellers and traders on more urgent, niche components, and extend supply chain visibility to the silicon level addressing bottlenecks.

Since the Covid-19 pandemic catalyzed the global chip shortage last year, the world’s leading chipmakers have moved to ramp up their production capacities.

Earlier this month China’s largest contract chipmaker Semiconductor Manufacturing International Corp. unveiled plans to spend $9 billion on a new factory in Shanghai, which will focus on the production of 28-nanometer-and-above integrated circuits.

In June Taiwan Semiconductor Manufacturing Co. Ltd. started construction of its $12 billion plant in Arizona, which will focus on producing advanced 5-nanometer computer chips.

Contact reporter Ding Yi (yiding@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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