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6981 - Murata Manufacturing Co News Story

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Large Cap
Market Cap £38.84bn
Enterprise Value £37.70bn
Revenue £10.56bn
Position in Universe 18th / 3900

Asian chipmakers rush to boost production to meet global shortage

Mon 8th February, 2021 8:24am
By Ben Blanchard and Joyce Lee
    TAIPEI/SEOUL, Feb 8 (Reuters) - Asian chipmakers are rushing
to expand their production capacity to meet a global shortage
that has been acutely felt by carmakers, but the firms warn that
the supply gap may take many months to plug as they struggle to
keep up with strong demand.
    Automakers from General Motors to Stellantis and Honda Motor
are shutting assembly lines due to the shortages, which in some
cases have been exacerbated by the former U.S. administration's
sanctions against Chinese chip factories. Some firms have also
furloughed staff.
    Eight-inch chip manufacturing plants owned mostly by Asian
firms, which tend to make older, less sophisticated chips, are
particularly under strain primarily due to under-investment in
recent years. The majority of such factories are used to make
auto chips.
    Consumer demand in China, especially for cars, has snapped
back unexpectedly quickly from the coronavirus crisis, and
orders for products such as laptops and mobile phones in regions
still struggling with pandemic restrictions, such as Europe and
the United States, have also picked up.
    The global concerns about the chip shortage were underscored
at recent quarterly earnings calls held by companies from Taiwan
Semiconductor Manufacturing Co Ltd (TSMC)  2330.TW  to South
Korea's SK Hynix  000660.KS .  
    "We are under great pressure now," said Zhao Haijun, co-CEO
of China's top chipmaker Semiconductor Manufacturing
International Corp  0981.HK , which last week announced plans to
expand capacity by 45,000 wafers per month at its 8-inch
fabrication plant this year. 
    However, the company cautioned that the capacity boost would
not occur quickly due to longer lead times for equipment
procurement, as it grapples with supply chain disruptions caused
by sanctions imposed by the former Trump administration.
    "We basically have at least one video conference a day with
a customer on how we can increase capacity, what adjustments we
can make on products," Zhao said. 
    TSMC, the world’s top contract chipmaker, said it was
"expediting" auto-related products through its wafer fabs and
reallocating wafer capacity and now expects to lift capital
spending on the production and development of advanced chips to
between $25-28 billion this year, as much as 60% higher than the
amount it spent in 2020.*:nL1N2JP0DA
    United Microelectronics Corp (UMC)  2303.TW , another
Taiwanese chipmaker, plans to spend $1.5 billion on new
equipment this year, up 50 percent from $1 billion last year, it
    South Korea's SK Hynix, the world's No.2 memory chip maker,
said it was speeding up plans to relocate its 8-inch facilities
to China, which is expected to reduce costs, in light of the
8-inch boom. The company wants the relocation to happen "as soon
as possible" rather than over an initially planned two-year
    Renesas Electronics Corp  6723.T  said on Monday it is in
talks to buy Anglo-German chip designer Dialog Semiconductor
 DLGS.DE  for about $6 billion in cash, as the Japanese
chipmaker looks to take advantage of the growing demand for
automotive chips. Renesas is due to release its latest result on
    The combination of supply shortages and surging demand has
put pressure on prices. UMC expects overall chip prices to rise
4-6% this year due to supply constraints set to last for another
few quarters, while Renasas  6723.T  told Reuters that they have
been negotiating for a 15% increase on auto chips and between
10% to 20% for other chips.
    Japanese companies with automotive semiconductor related
business have so far provided few details related to any
shortages or how customers have been affected.
    "We are working hard with semiconductor manufacturers, and
the supply crunch should ease as capacity growth catches up this
summer," Yasushi Matsui, the chief financial officer at key
Toyota Motor Corp  7203.T  part supplier Denso Corp  6902.T ,
said last week.
     Fang Leuh, the chairman of Vanguard International
Semiconductor Corp  5347.TWO , whose biggest single shareholder
is TSMC, said the demand frenzy "would not last forever".
    "Sooner or later it will overheat, there will be some come
down or set back."

 (Additional Reporting by Josh Horwitz in Shanghai, Tim Kelly in
Tokyo; Writing by Brenda Goh
Editing by Shri Navaratnam)
 ((; +86 (0) 21 2083 0088; Reuters
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