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IFX - Infineon Technologies AG News Story

€33.87 0.6  1.7%

Last Trade - 22/04/21

Sector
Technology
Size
Large Cap
Market Cap £37.44bn
Enterprise Value £40.60bn
Revenue £8.02bn
Position in Universe 35th / 1050

BREAKINGVIEWS-Chip shortages are here to stay, for some

Tue 2nd March, 2021 3:12pm
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Robert Cyran NEW YORK, March 2 (Reuters Breakingviews) - Some companies will need to get used to the global chip drought. Pandemic-led demand swings and trade wars have left factories short of microprocessors. The semiconductor industry’s coming splurge on new capacity will benefit smartphone manufacturers and data centers more than automakers. Shortfalls are widespread. The $340 billion Nvidia NVDA.O hasn’t been able to meet demand for graphics chips it designs for about half a year. Sony 6758.T warned there may be shortages of games consoles this Christmas. Carmakers are facing a particularly severe squeeze because they canceled orders during the pandemic. General Motors GM.N says the chip shortage may slash its earnings by up to $2 billion this year, while Ford Motor F.N estimates a hit to its bottom line worth as much as $2.5 billion. Chip shortages usually spawn subsequent gluts as manufacturers rush to meet demand, and investment is underway. Taiwan Semiconductor Manufacturing 2330.TW , the biggest chip contract manufacturer, plans to increase capital spending by about 50% to as much as $28 billion this year. Not all chip buyers will benefit equally, however. Most investment will increase production of advanced chips used by customers like Apple AAPL.O . Applied Materials AMAT.O , a maker of gear for semiconductor plants, says about 70% of its equipment orders are used to make cutting-edge chips. The industry doesn’t have much incentive to build new fabrication plants to produce lagging-tech chips, since there’s less time to recoup the investment. Older plants can keep producing for years for customers that don’t need the latest state-of-the-art chips. Industries that use simpler semiconductors may therefore face shortfalls for a while. Automakers used about $40 billion of chips in 2018, according to Digitimes Research, and demand is increasing. Infineon Technologies IFXGn.DE , the $57 billion German group, estimates a traditional automobile uses microprocessors worth about $400. Fully electric vehicles need twice as much and self-driving ones will use far more. No shortfall lasts forever. Customers can eventually use more advanced and more expensive chips. Manufacturers will be tempted to boost investment. Indeed, Applied Materials says sales of less sophisticated tech gear have grown faster over the past decade than the most advanced new technologies. And both the United States and European Union are weighing subsidies for domestic chip manufacturing. Even so, it may be a dry year for some. On Twitter https://twitter.com/rob_cyran CONTEXT NEWS - President Joe Biden on Feb. 24 said he would seek $37 billion in funding for legislation to encourage semiconductor manufacturing in the United States, following shortages which have hampered production of automobiles and other manufactured goods. - The European Union is also exploring how to produce more semiconductors, including cutting-edge ones, in response to the same shortages. - For previous columns by the author, Reuters customers can click on CYRAN/ - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Biden to press for $37 bln to boost chip manufacturing amid shortfall urn:newsml:reuters.com:*:nL1N2KU1HD BREAKINGVIEWS-EU chip factory fantasy puts cart before horse urn:newsml:reuters.com:*:nL8N2KV8P9 BREAKINGVIEWS-Panic buying scrambles tech circuitry urn:newsml:reuters.com:*:nL4N2H705L ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Peter Thal Larsen and Karen Kwok) ((robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))
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