Chipmakers invest to ramp up capacity amid persistent global shortage

The impact of the shortage has been amplified by the fact that semiconductors have become crucial in products from mobile phones to laptops and cars.
The impact of the shortage has been amplified by the fact that semiconductors have become crucial in products from mobile phones to laptops and cars.PHOTO: AFP

SINGAPORE - Semiconductor manufacturers globally have seen demand outstrip supply since last year, with the shortage predicted to continue into next year and possibly beyond that.

The impact of the shortage has been amplified by the fact that semiconductors have become crucial in products from mobile phones to laptops and cars.

The chip shortage was triggered by the Covid-19 pandemic, which caused manufacturers to adopt a more conservative approach towards projections and orders. But stronger-than-expected recovery led to a sudden upswing in demand that caught chipmakers unprepared.

The squeeze has led to delays in production and in some cases brought operations to a standstill. Automakers cut production by nearly one million vehicles in the first quarter because of the lack of chips, according to research provider IHS Markit.

GlobalFoundries' planned investments in its Singapore, Germany and United States facilities in the next two years are reflective of the immediate action manufacturers are taking to meet the surge in demand.

It is one of the largest foundries - contract chipmakers - worldwide in terms of market share. It manufactures semiconductors designed by chip giants AMD and Qualcomm.

Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, announced in April that it would be putting US$100 billion (S$134.7 billion) towards increasing capacity as well as research and development to meet demand.

Global leaders are increasingly aware of the implications of the shortage. China and the US have both mooted financial support to bolster domestic semiconductor production amid concerns about supply and national security.