Why is there a global shortage of semiconductor chips?

There are numerous factors in the shortage of semiconductor chips and it is hard to list them all. Of course, the pandemic ranks high among them. But there are also key political factors. China is widely blamed for poaching intellectual property, but then other actors do the same. It is hard to think of a suitable solution to this tech theft, but the US invariably prefers to blame and punish another country, preferably China.

shortage of semiconductor chips

Punishing is very popular among low-information voters and US politiicans will probably never give it up voluntarily, so we are stuck with a bad solution indefinitely.

Trump’s ban on Chinese chip imports and his use of brute force to prevent other countries from selling high-end chips disrupted the supply chain in ways that backfired on the US itself and impacted the rest of the world.

One key type of equipment for advanced manufacturing has never been delivered to any foundry in China and therefore represents a likely bottleneck on any Chinese effort to climb the sophistication ladder to the leading edge: Namely the extreme ultraviolet (EUV) scanner that enables shrinking the integrated circuit patterning for leading edge manufacturing.

Today, there is only one commercial supplier for the EUV scanners, the Dutch company ASML.

In late 2019, the Dutch government did not renew an export license for ASML’s EUV scanner to be sent to SMIC in China, after aggressive encouragement from the United States. D

uplicating the technologies ASML has, and that China needs, would be a substantial undertaking for China, and one not likely to succeed. ASML, its partners, and multiple national governments invested billions of dollars over more than 30 years to develop the many innovations needed for that scanner.

The “fast follower” approach such as China has demonstrated in some other fields is unlikely to work in seeking to replace foreign suppliers for such complex equipment.

shortage of semiconductor chips

It is possible to manufacture at 10 nm nodes and below, possibly even down to the 3 nm node, without such an EUV scanner, through an alternative fabrication method that uses multiple overlaid patterning iterations employing older deep ultraviolet (DUV) scanner technology to achieve the pattern size reduction.

The DUV scanner is equipment that has been exported to China and is unlikely to face the restrictions placed on the EUV scanner.

Still, even if China’s foundries are able to use DUV scanners in fabricating chips in this way, the additional patterning will likely result in their manufacturing being more expensive overall, and with lower yield, as compared to the foundries in Taiwan, South Korea, and the U.S. that use EUV scanners.

In other words, China faces a bigger problem than the West and it might take many years for it to resolve it.

Nonetheless, the biggest market for semiconductors and devices containing them is actually China itself. So any ban on exports of chips to China is also a major drawback for Western manufacturers as well. Hence, it seems that there will no easy way to solve shortage of semiconductor chips.

Finding similar topics, you should check: technology

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