Japan’s Rohm Co said that vital semiconductors for automobiles and industrial machinery are likely to remain in short supply at least throughout next year, adding to ominous warnings about further fallout from the global chip crisis.
The Kyoto-based chipmaker, whose clients include Toyota Motor Corp, Ford Motor Co and Honda Motor Co, has been hampered by a severe shortage of key materials, as well as full production lines, Rohm CEO Isao Matsumoto said.
The company started beefing up its capacity in September last year and plans to spend another ￥70 billion (US$636 million) this fiscal year, but the full contribution from such investments would not be seen immediately because production machinery is taking longer to arrive, he added.
Photo: Bloomberg
“All of our production facilities have been running at their full capacity since September last year, but orders from customers are overwhelming,” Matsumoto said in an interview this week. “I don’t think we can fulfill all the backlog of orders next year.”
It joins peers like Infineon Technologies AG in warning that supply chain struggles are likely to persist for far longer than previously anticipated. Chip delivery times have already surpassed 20 weeks, as the Delta variant of SARS-CoV-2 complicates efforts to resume normal operations from Japan to Southeast Asia.
Material and component shortages, compounded by jammed trains, ships and planes, have forced global automakers from Toyota to Volkswagen AG to cut or suspend production in recent weeks. The Japanese auto giant last week said that it would temporarily halt production at 14 plants.
Founded more than 60 years ago, Rohm has become an integral part of the automotive supply chain, as automakers add more electronics and semiconductors to vehicles. The Japanese manufacturer’s automotive solutions include devices used for power management, air-conditioning, lighting and entertainment.
The most severe bottleneck is a lack of materials like those required to make leadframes — the metal structure inside a semiconductor unit that communicate signals with the outside of the package.
“Offers to hike prices won’t do a job at all anymore, because our suppliers just don’t have a unit of stock at hand,” Matsumoto said
The shortages might benefit the bottom line.
“Rohm’s operating profit margin may widen as its planned capacity expansion could bode well for sales and profit growth, as well as overseas market share gains, amid looming global chip shortages,” Bloomberg Intelligence’s Masahiro Wakasugi and Ian Ma wrote in a research note this month.
Still, some analysts said that a sudden drop in demand might eventually follow, as beefed up production lines start contributing to capacity and customers finish securing enough inventories.
“The current crunch is stemming from suppliers’ lack of output and makers trying to buy more components than what they need due to concerns,” Morningstar’s head of equity research Kazunori Ito said. “Both should go away in 2023 or so.”
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
PROJECTION: TSMC said it expects strong growth this year, with revenue in US dollars projected to grow by about 30 percent, outperforming the industry Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported consolidated sales last month reached NT$317.66 billion (US$9.98 billion), the highest ever for the month of February, driven by robust demand for chips built using the company’s advanced 3-nanometer (3nm) process. Last month’s figure was up 22.2 percent from a year earlier, but fell 20.8 percent from January, the world’s largest contract chipmaker said in a statement. For the first two months of the year, TSMC posted cumulative sales of NT$718.91 billion, up 29.9 percent from a year earlier. Analysts attributed the growth to sustained global demand for artificial intelligence (AI) products
RSS