2021 PC industry crisis comes from chip shortage

Release time:

2021-03-04

Computer maker Acer and key technology suppliers have warned that a global shortage of electronic components is intensifying despite strong demand, threatening to hamper growth in the PC industry this year.

"We have been facing a situation where supply exceeds demand," Jason Chen, chairman and chief executive of Acer, said Wednesday." "Due to the shortage of components, we are feeling increasing pressure, and our employees are stepping up their efforts to chase all the components they need every day."

Global technology supply chains have been grappling with shortages of semiconductors and other components since last year, when the "stay-at-home economy" of the coronavirus pandemic began to spur demand for computers, servers, game consoles and other devices. The problem is particularly acute for automakers, who did not expect demand to rebound by the end of last year.

"You see the auto industry craving more chips now, and the console makers are demanding more chips... It's all happening together as all the industries recover. It's definitely causing a crowding out effect." Chen added.

Chen said the situation remains a "happy issue" for Acer as the PC industry is expected to continue to grow in 2021 ". However, he declined to provide specific growth forecasts because of supply uncertainty.

"This is really a phenomenon the industry has not seen in the past. The reason for the shortage is not in core chips like central processing units (CPUs) and graphics processors, which are worth 100 or 200 dollars, but mainly in companion chips, which are worth only 80 cents or even 50 cents per unit." "But devices and computers still need these supporting chips to complete."

Chen added that the component shortage is likely to continue through at least one quarter of this year. He said: "This is not only about chips. There is a close relationship in logistics and transportation, including in the competition for containers and fleets."

Acer, the world's fifth-largest PC maker, has a market share of just 7 percent, with shipments up 23 percent last year. According to IDC, the overall PC industry grew by 13%, its performance since 2010.

In the second half of last year, the PC industry began to suffer from a shortage of various components, from WiFi and power management chips to image sensors, audio-related components and displays, to various fields. Earlier this year, the auto industry's demand for more chips further strained supply.

Other major PC makers, including U.S. vendors HP and Dell, are also vying for more chips to maintain their growth momentum.

"We also see a gap between supply and demand," an industry manager with knowledge of Dell's production told Nikkei Asia." "The company has to decide wisely on the allocation of the chips it owns and does need to adjust some business plans and forecasts."

Meanwhile, local media in Taiwan reported that Hewlett-Packard Chief Executive Officer Enrique Lores and company purchasing director Kee K. Chang will visit Taiwan this week as part of efforts to protect HP supplies. As of the date of publication, HP had not responded to Nikkei Asia's request for comment.

The chief executive of chipmaker Xilinx has previously told Nikkei Asia that the component shortage has spread beyond semiconductors to substrate materials such as Ajinaki Stacked Film, known as ABF. These are essential for packaging high-end chips for cars, servers and base stations.

Taiwan-based display maker Qunchuang Optoelectronics (Innolux), a supplier of Hewlett-Packard, Dell and Acer, estimates that the display supply constraints will continue at least until the end of the year because of strong demand for laptops. Components used to make displays also remain in short supply, the company said.

"Taiwan's key components such as polarizers, integrated circuits (integrated circuits), glass and even water are in short supply," Yang, president of Qunchuang Optoelectronics, said at an investor conference in Taipei on Wednesday." "Due to the home economy, there is a stable demand for displays for PCs, but with 5G, electric vehicles and cars are competing for chip resources, and the outlook is clouded by uncertainty."

The president said that Qunchuang Optoelectronics did not have time to build display inventory because customers would have to retrieve finished products soon after production.

Yang pointed out that Qunchuang Glass has been reallocating its inventory of large-size glass to cut it into smaller sizes to meet demand, and optimizing the company's "buffer component inventory" to ensure that its production is not affected. The monitor supplier, ranked fourth in the monitor display market, has expanded its water storage facilities and signed a contract with a rental water tank operator to ensure water supply in Taiwan amid worsening drought, the president said.

However, chip supply remains a problem. "In the past, the delivery time of driver ICs was about four months, but now even after six months, some of our suppliers still cannot give us stable shipments." Between the display and other processors.

Clark Tseng, director of industry research at SEMI, an industry association, said he expected all segments of the chip industry to grow this year, but widespread component shortages raised questions about how to move quickly.

He further pointed out: "Shortages and sealability have also expanded to various chip packaging materials, and even the waiting time for production equipment to manufacture these materials has become longer. This is a chain reaction," Tseng said. "Even though many companies are considering expanding capacity, it's not going fast enough for them to address the shortages in front of them."

From: Semiconductor Industry Watch

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