ASML Says Chip Shortage Will Last At Least Two Years

ASML is the only producer of critical EUV (extreme ultraviolet) lithography machines which are needed for the most advanced chips. ASML predicts the chip shortages will persist for at least the next two years. The warning is said to stem from ASML’s reliance on its suppliers, including Germany’s Carl Zeiss, which provides essential lenses. Zeiss, in turn, has also been impacted by supply chain issues.

“They need to make significantly more lenses,” ASML chief executive Peter Wennink told Financial Times. But as Wennink explained, that requires them to “build clean rooms; they need to start asking for permits; they need to start organizing the building of a new factory. Once a factory is ready, they need to order the manufacturing equipment; they need to hire people. And then…it takes more than 12 months to make the lens.”

“If you look at it from a broader sense, we have a shortage in semiconductors, period, for at least the next two years. It’s going to take that long to not only bring some of that new capacity online, but it’s also going to take a while to smooth out the demand. Right now, a lot of capacity shortages are in regards to the older generation; the older 2D semiconductor products such as 45nm, 65nm, and even I would say 28nm,” McGregor said.

I, Brian Wang at Nextbigfuture, made a video uploaded 9 days ago that predicted the chip shortages will last into 2024. This was in particluar for the older chips used for cars.

Written By Brian Wang,

32 thoughts on “ASML Says Chip Shortage Will Last At Least Two Years”

  1. I think crypto-mining also exacerbated the problem. Lock people up, funnel money to them, and then expose them to bitcoin. Genius!

  2. Note Zeiss is in Germany, where it usually takes a while to permit stuff. Tesla's gigafactory Berlin was set up at lightspeed in german terms and that still took quite a while due to environmental reviews.

    Automotive chip fabs also are located in europe, I think mostly in germany as well (Bosch)? Though to be fair to the auto chip fab owners, they are not building up capacity because they got burned by the auto industry during early covid with their just-in-time supply chains never inventorying anything and going cold on orders (and I think also once before in recent memory as well). They are being locally rational that building new capacity will result in oversupply very soon afterwards, such that they will be left holding the bag again by automakers.

    Fixing the semiconductor supply chain requires certain systemic fixes, but that's partly political, and partly economic (raising prices to cost in a requirement to store inventory).

    Note that is the antithesis of Apple, which is currently only running with 5 days inventory or less (offloading inventory costs to their suppliers), compared to typical electric device manufacturers holding onto 45 days or more worth of inventory and/or parts.

  3. I was mistaken about two ships; Felicity Ace just sank, but there was a recent report about the Golden Ray that I'd just caught the tail end of, and missed that they were referring to finishing up salvage on an older wreck.

  4. Tesla doesn't build any chips never has. What tesla did for the full self driving computer ships is thathtey designed it. and then hired a foundry to build it. A Foundry is a company that makes custom chips TSMC) for example) for anyone. You provide them the design and they build it.

    Add to that people purchased more computers so they could work from home or the kids could attend remote learning class.This additional demand also made it harder for chip manufactures to catch up after shutdowns.

    But that said most of the chip shortage were not of the newest generation of chips. Most of the shortages were for chips that have been in productions for a long time. Covid 19 Lockdowns shut down factories and supply shortages made it hard to get them on line.  

    Add to that people purchased more computers so they could work from home or the kids could attend remote learning class.This additional demand also made it harder for chip manufactures to catch up after shutdowns.

    Tesla solved the supply problem by identifying alternatives, that were not in short supply, and that could be used as substitutes This required changing some software on these chips and redesigning the printed circuit boards to accommodate the different chips. This is much easier and faster than building a new chip factory.

  5. The arbitrage market has existed for decades. it is probably bigger today than it was back in the 90s when my employer had to use it.

  6. The US is one of many countries which have chip manufacturing plants. Most of the chips we buy today are made in japan, china, taiwan, europe malaysia and many other places.

    I worked 30years for company that made some of the manufacturing equipment used (not the EUV machines). New fab are bing built all the times. and older ones are bing modified and upgraded. The industry for decades has faced numerous supply surges and collapses. Many were forcible but no one foresaw Covid 19 and predicted a havoc it would play on industries throughout the world. In the last couple of years shortages have occurred in all industries due to issues cause by COVID 19.

  7. That seems odd. People could not test drive cars that were missing the chips. Even if you mean the boards are installed when the car arrives at the dealer, it still seems odd to me that such a procedure would be adopted. However, I have no experience with what goes on with new car deliveries,, so I can't say you definitely are wrong.

  8. Two ships full of cars sank? I only recall one.
    No, I don't suspect the cars on the sunken ship I heard about were missing their chips.

  9. Unfortunately, we never have the opportunity to choose perfect or even best leaders. We only get to choose who is the least bad of the choices offered. Many believe that Trump was the lesser bad of the choices offered. You, apparently, disagree. Odd that you seem to think the two opponents he faced were not "members of rich elite".

  10. I can't be sure, but I have a feeling that the change you mention is not due to an increase of fab capacity. I think it is due to drop in demand from crypto-currency miners because of the crackdown on their activities in China. Even if that depressed demand is permanent, I believe it still would only affect the graphics card segment of the chip market, and would not relieve the overall chip shortage. But I easily could be wrong about this.

  11. I don't know the answers to your other questions, but I think I know the answer to your question about why Musk can build his new factories quicker. I believe that, although Musk's factories are pretty complex, the chip fabs are far more demanding to build. In the 1970s, near the beginning of the development of microelectronics, chip fabs were built in much less time than it takes now. As I understand it, the reason it now takes much more time is that the extremely small features on the chips can only be created in environments that are very hard to create and maintain, and the equipment needed to create those very small features is very hard to build. Those things were much easier to achieve for the large feature sizes that were used in the 1970s. At each reduction in feature size, all those things became a bit more difficult. And, of course, reduction of feature size is how we increase the speed at which the chips work and increase the amount of functions we can put on a given chip.

    I am pretty sure that if Musk tried to build a chip fab, he coudn't do it any faster than Intel, TSMC, or Samsung can do it, unless he or his people think of some approach that gets around the difficulties that have slowed down the normal approach to building chip fabs. Musk has been able to do many surprising things, so I will not say he definitely could not find a way to speed up building chip fabs, but I definitely would be very surprised if he did.

  12. i know the video card shortage dam has broken. You can now buy gaming graphics card that have not been available in over a year at almost affordable prices . Stores like BestBuy now have stock of card that are only 40% or so overpriced. But they are now available. Something changed in the last few weeks. I might even do an upgrade myself. finally.

  13. By the way, those two cargo ships full of cars that sank over the last couple months… Anybody else suspect those cars were missing their chips?

  14. Can I ask a few honest questions?

    How many new fab plants have been announced for the US over the last 3 years? Arizona, Texas, Ohio?

    What are the states of completion for those plants?

    Why can Musk and company seemingly build massive, complex new plants in less than two years, while everyone else takes 5?

    The most important question: Why did no one see this coming 3 years ago? It can't just all be related to the lockdowns…

  15. There is a highly active chip arbitrage market now where companies are selling leftover stock from prototype runs and cancelled products. You can find just about anything you need for 10-30x pre-shortage pricing.

  16. Most of the high-end stuff can only be done with EUV. The DUV fabs can't produce the discrete component density needed to fit inside a, for example, Note 10 phone which used chips made with EUV. ASML has only ever made 140 of their monster machines that cost $200 to $300 million each. The Zeiss lenses mentioned above are so flat, that one of the lenses blown up to the size of the USA would have imperfections of 1 mm tall. Crazy complex tech!

  17. We really cant progress with members of rich elite such as Trump, who even cheated charity. People would still vote him.

  18. Yeah, I concur. A lot of the green hysteria reeks of elitism. Same as the rampant NIMBYsm.

    What's left to differentiate the poor from the elites but relative social status, the people they cohabit/mingle with and the place they live on?

    They want to stop anything that can threaten a change in the power structures by making the poor effectively wealthier, something they find deeply offensive for their perceived importance.

    Be it oil consumption (which has actually improved human condition) nuclear energy, modern medicine, GMOs, better housing, anything that can make the poor better off and hence, uppity and start questioning their betters.

    And what to say of the far left craziness? a lot of it speaks of the oppressed but only perpetuate the vices they are supposed to fight, creating new oppressions and a new kind of moral elites, who serve the interests of the actual elites.

  19. I don't think it's driven by the population's fears. It's top down.

    In a moderately poor society, the elites see the whole society getting wealthier as a precondition of THEIR getting wealthier, and accept the risk that somebody else might also get ahead as worth taking.

    But, at some point, a society's elites decide that they've got it made, and their priority becomes making sure nobody displaces them. And if that means society stops advancing, that's fine, because they've got theirs, and having all the physical wealth they could possibly want, it's relative position that they value.

    So they clamp down on the economy to make sure that the NEXT generation of innovators don't displace them.

    I think that's what has happened throughout the West: Our elites have decided they're comfortable enough, and have applied the brakes to keep anybody else from getting ahead.

  20. Yep. Drown under red-tape and over-regulation.

    Because freedom is scary we need gatekeepers for everything.

  21. We're also rightfully suspicious that China wants us economically dependent so that we won't lift a finger as they invade neighbors.

  22. Maybe. But maybe we're rightfully suspicious due to the fact that China has a history of putting spying capability in their chips.

  23. Is that true? I.e. that China has old technology node fabrication capacity that the west will not buy? Seems unlikely that all automakers would just let the Chinese automakers take over just because they would rather not produce EVs if the only way would be to buy simple chips from China..?

  24. "But as Wennink explained, that requires them to “build clean rooms; they need to start asking for permits; they need to start organizing the building of a new factory. Once a factory is ready, they need to order the manufacturing equipment; they need to hire people. "

    Part of it is bureaucratic inertia, similar to the way we're suffering an energy crisis in the US but the bureaucracy won't get out of the way. (Are under orders get IN the way, really!)

    And part of it is that, even now, they're not seeing any urgency. Who waits until the factory is built to order long lead time equipment, in an emergency?

    But, maybe that's bureaucratic inertia, too: Maybe they can't order the equipment because they have no confidence they'll be permitted to finish building the factory?

    Or maybe their accountants won't let them abandon the "just too late" practices that caused this cascading supply chain failure in the first place?

    The Empire State building took barely over a year to build; The world's tallest skyscraper was finished in 410 days! Today, I see three story buildings around here taking longer than that to finish.

    I think Covid exposed something important: Western society is broken.

  25. There is no shortage in China. There is a shortage in the West because they banned the chinese from exporting it to their countries.

    A manufactured crisis….the west killing itself.

  26. Sure, the production capacity for the old nodes are also sold out. But I am proposing building new fabs with old tech. Are you saying that 45nm *equipment* is also sold out?

    Jeeze, what a clown show this is…

    I can only hope that the chinese will pick up the low tech slack…

  27. Money! If you create a shortage, you drive up the cost and charge more money. It wasn't like Comrade Xi or Putin, invaded the chip facs or shot the lithography techs now was it? Outta just the right sand, yeah that's it!

  28. No, the older process nodes are sold out too. That's the problem in the auto sector.

    What confuses me is why Carl Zeiss was not working on expanding capacity 18 months ago when it was already clear this was a problem.

  29. So the industry is severely supply constrained to build the latest technology node….

    Build. older. technology. nodes.

    Who cares if the chip adjusting the position of the car seat is 7nm or 45nm technology? What am I missing here? The whole situation seems incredibly unnecessary and stupid. The transition to EVs is being held up because…. pride?

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