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Are we running out of capacity?

Semiconductor fabrication is a tricky business.

Wafers of silicon must be turned into intricately detailed chips in a complicated process that involves many stages and a great deal of very expensive equipment.

Given the complexity and cost associated with setting up a manufacturing plant, it's little wonder that there are so few of them and why, right now, they're working to capacity.

In fact, the world's semiconductor manufacturing plants seem unable to keep up with demand, and that's hurting a lot of companies dependent on their outputs.

It's not just computers, game consoles, GPUs and other products that are now suffering long lead-times, it's also more mundane products affected by this bottleneck.

A raft of car-makers, including Ford, Honda, Nissan, Subaru and Toyota have all had to suspend manufacturing for lack of the semiconductors used in their increasingly complex vehicle systems.

According to this BBC report, there are "large scale supply shortages" and the bottlenecks are expected to continue "well into 2021, causing major disruptions".

Even if you're not in the market for a *new* car, the flow-on effects may also impact the used-car market. If people can't buy new ones, they won't be selling their existing ones into that market will they?

The semiconductor manufacturing crisis has also coincided with a resurgence of interest in crypto-currency mining, as Bitcoin hits record new highs. Undoubtedly this has meant that the latest generation of GPUs are now being keenly sought by those who wish to capitalise on the rising values, putting us back to where we were some years ago when demand drove the price of GPUs well above the MSRP.

I can't help but wonder whether we're going to see a significant investment in new and more sophisticated manufacturing capacity by the Chinese in coming years. This will be prompted not only by demand by world markets but also by the USA's increasingly harsh attitude towards supplying Chinese manufacturers with US-made semiconductor technologies.

Given that semiconductors, often in the form of tiny microcontroller devices, are now an integral part of everything from toasters to televisions, any hiccups in the manufacture or supply of modern integrated circuits can have significant and often unexpected flow-on effects. This is worsened by, as discussed in yesterday's column, the transition away from the "repair and reuse" culture to one of "just replace it". If the parts needed to build new devices are in short supply, replacing a faulty device may no longer be an option, or at least not an affordable one.

I can't help but feel that with the world in such a precarious position right now, those folk who have an old Morris 1000 in the garage, a "dumb" toaster, a well planted home-garden, solar power and very little reliance on microcontroller-based appliances may turn out to be in a very enviable situation.

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